‘Round the Trade
Kroger, which has had a great run on almost every measurable level for the past five years, continued its strong sales and earnings performance in its recently completed first quarter. The Cincinnati based chain increased overall sales 3.4 percent to $30 billion and earned $481 million for the period ended May 25. Additionally, identical store growth (excluding fuel) was a very healthy 3.3 percent. This marks the 38th consecutive quarter of positive ID sales for the chain, which spent $646 million in cap-ex in the period compared to $557 million in the first quarter of fiscal 2012. “Kroger achieved strong sales and record earnings per share for the quarter, and our customers’ positive view of us continues to improve,” said David Dillon, Kroger’s chairman and CEO. “This is because of our continued focus on the Customer 1st strategy. Our first quarter results give us the confidence to raise our guidance for the year.” Kroger also announced that it is restructuring its divisions in the south. The retailer has added new divisions in Nashville, TN and Louisville, KY. The new organizational structure replaces the old Mid-South division, which was also based in Louisville and, according to the company, the revamped structure will allow it to better focus on growth opportunities in Alabama, Kentucky, southern Illinois and Indiana. Rick Going has been named president of Kroger’s new Nashville division and Calvin Kaufman will head the new Louisville division…no wonder Smithfield Foods’ CEO Larry Pope was so happy about the recent announcement that the big pork processor had reached a deal to sell to China’s Shuanghui International. I’d be happy, too, if I knew I could receive more than $46 million in compensation, which could be Pope’s payout, according to an SEC filing last month. According to the filing, Pope could be eligible to receive $28 million in cash and an additional $18.6 million in equity…a related note about my earlier comments in this column about Cerberus Capital Management and how it is attempting to create positive change at one of its banners – Acme Markets – which for years was the leading grocery chain in the Philadelphia market but under Supervalu’s incredibly poor management has now slipped to the fourth position in the Delaware Valley. After three months of ownership Cerberus and its new local leadership in Malvern, PA, Acme have begun to make visceral changes to its operation. Beginning on June 21, the once-mighty chain unveiled a new advertising look and marketing plan featuring thousands of lower everyday prices and the elimination of the Acme SuperCard (the entire Albertsons national fleet of about 1,000 stores has discontinued loyalty card programs). Acme customers can still use their loyalty cards, which will provide benefits for some ancillary marketing and tie-in promotions, but not for the purpose of discounting items. After speaking with senior Acme officials just prior to the release of the new ad plan, it was clear that the division of New Albertsons, Inc. is really determined to plug the many holes that former owner Supervalu created in seven years of control. In fact, Acme division president Jim Perkins appears in Acme’s new circular pledging improved service, cleaner stores and better pricing. In a related letter to Acme’s vendor, Dennis Clark, VP-merchandising and marketing, also outlined several areas that the chain will focus on. Those include improved quality in the company’s “fresh” departments (Acme has been prioritizing upgrading its perishables conditions since the new management took over) and a “Fresh or it’s Free” guarantee. “Everyone has worked hard to make this day significant. We know we haven’t arrived but we are pleased with the progress we have made in a few short months. We need your support as we continue down the path of rebuilding Acme. I am convinced we are on the right course to drive sales together. I encourage you to visit an Acme near you and see the changes we have made,” Clark stated in his letter. During my discussion with those senior Acme officials, I emphasized that without significant capital investment, these other well intentioned and hopefully well executed plans can’t be a difference maker. Their response to me was that significant capital investment is coming, both in real estate and other infrastructure improvements. If that’s the case, then Acme has a fighting chance to reclaim some of the glory it enjoyed for much of the past 50 years…sadly, I have several obits to report this month. Bobby “Blue” Bland, one of the greatest R&B singers of all time, passed away late last month at the age of 83. While Bland may not have gained general popularity, his smooth as silk voice was regarded by his peers as one of the best vocal instruments ever. Two of his best songs became hits for other artists, “Further on Up the Road” (Eric Clapton) and “Turn on Your Love Light” (The Grateful Dead). Bland, whose career began in the early 1950s, was still touring up until a few months ago…joining the “Country Music Hall of Heaven” was single Slim Whitman. The 1950s country singer who encouraged a teenaged Elvin Presley when he made his professional debut in a concert headlined by Whitman. After fading from the limelight by the late 1970s, Whitman enjoyed a comeback of sorts when he sold millions of records via late-night infomercials. The success of those TV spots resulted in Whitman being abetted by “Tonight Show” host Johnny Carson, who good humoredly mocked Whitman’s schtick and held Slim Whitman lookalike contests. He was 90…we also learned of the sudden and untimely passing of James Gandolfini, who in my opinion was one of the great American actors of the past 25 years. Gandolfini passed away in Rome, Italy where he was to attend a film festival and the young age of 51. While the New Jersey born actor (and Rutgers alumnus) will forever be known as brooding mob boss Tony Soprano, you can better judge his greatness and versatility in a couple of supporting roles before he became an American icon. If you have the opportunity to rent “True Romance” (1993) and “Get Shorty” (1995), you’ll easily recognize the power and charisma he displayed. “He was a genius,” said Sopranos creator David Chase. “Anyone who saw him, even in the smallest of his performances, knows that. He is one of the greatest actors of this or any time. A great deal of that genius resided in those sad eyes.” …and lastly, one of our own, the great Lou Rosenthal has passed on at the age of 91. One of the funniest and most interesting men I’ve ever known, Lou joined us in 1986 after his retirement from Entenmann’s, bringing his many sales talents to our advertising team. He finally officially retired from Best-Met in 2011. With humor and wisdom, Lou managed to entertain us every day, regaling us with stories from his days growing up in the Catskills to previous jobs as a gas station owner in Florida to his experiences as a door-to-door salesman. A wonderful, genuine mensch, Lou will be missed.