‘Round The Trade
I was sorry to see Bob Bly exit Shoppers Food & Pharmacy after less than a year as president. Bob was a high energy, “glass half-full” person who recognized the challenges facing him when he took the job last August. He spent a lot of time in the stores and Shoppers indeed has lowered prices, attempting to regain the mojo it had when it was perceived as the leading discount food retailer in the B-W market. Obviously, Supervalu drained that bottle years ago, and getting the “toothpaste back in the tube” is an almost impossible job for anyone given Shoppers’ erosion and the overall current economic and competitive climate. If you were to judge numbers alone, it’s true Shoppers’ sales still need significant improvement, but that could be said of any of the banners that Supervalu ruined over the past seven years. Perhaps because he was one of the few non-Albertsons/Bob Miller division presidents running a Supervalu or New Albertsons retail banner, the fit wasn’t a good one, but Bob Bly will prove to be a valuable asset to somebody in the near future. In the meantime we wish both Bob Gleeson (merchandising) and Micky Nye (operations) the best of luck in their interim roles as co-presidents while Supervalu searches for a replacement for Bly…we’ve heard from several sources that Aldi is eying the Richmond market for future expansion. It’s first Richmond store is slated to open in the latter half of 2014 and the privately-held international retailer is reportedly seeking more sites in the Old Dominion’s capital city. While there’s been a lot of new store expansion in recent years in Richmond, most of that growth has come from upscale retailers (Whole Foods, Fresh Market, Trader Joe’s, Kroger’s new Marketplace prototypes), leaving a hole in “middle to lower” economic strata which Aldi obviously has identified…Canadian drug chain Jean Coutu Group has filed to sell its 65.4 million shares (at a value of $180 million) in Rite Aid. The Quebec firm initially acquired those shares when Rite Aid purchased the company’s Eckerd and Brooks drug chains in 2007….some quarterly financials to report: at Weis Markets the good news is that the Sunbury, PA chain produced a 4.2 percent increase in its second quarter net income compared to the same period in 2012 and that its earnings per share increased $.04 to $.90 during the quarter. During the 13 week period ending June 29, 2013, the company generated $24.2 million in net income compared to $23.2 million in 2012 while operating income increased 6.5 percent to $37.6 million. The not so good news: Weis’ second quarter sales declined 2.2 percent to $662.1 million, compared to $677.1 million in 2012. Second quarter comparable store sales were down 4.8 percent.”We attribute our net income and operating income increases to increased store level productivity and improved distribution efficiencies which helped us maintain our in-stock position and the overall quality of our fresh departments,” said Weis Markets’ president and CEO David Hepfinger. “While our market share remains stable, our sales were impacted by the continuing trend of cautious consumer spending and a challenging comparison to the same period in 2012 when we opened three new stores and were aggressively promoting a new replacement unit. As a result, we fell short of our sales goals. We are encouraged by some recent sales trends and expect to improve our sales results in the coming quarters.”…at Harris Teeter, which will keep operating as usual until it receives FTC clearance to be officially acquired by Kroger, the numbers remain very good. While the regional chain said the timing of both the Easter and July 4th holidays impacted sales for the third quarter, earnings nearly doubled. The Matthews, NC-based retailer reported net income for the quarter ending July 2 of $31.1 million, vs. $15.8 million in the year-ago period. Operating results for the year-ago period included approximately $22.3 million of impairment losses and other costs associated with the Lowe’s Food Stores acquisition and sale a year ago, and gains of $3.1 million recognized from life insurance proceeds. Sales for the third quarter were up 2.9 percent to $1.19 billion, and comparable-store sales rose 1.29 percent (a very good number considering the current sales and competitive environment. The company said the shift of Easter holiday sales into the second quarter of 2012 and of July 4 holiday sales into the fourth quarter of this year had a negative impact on comps of 70 basis points. During the first nine months of fiscal 2013, Harris Teeter opened five new stores, two of which were the stores acquired from Lowe’s that were re-opened under a new format and banner – “201central” – and one of which replaced a store previously closed…some national news of note: Spartan Stores is acquiring Nash Finch in a deal involving two large Midwestern wholesale grocers. The $1.3 billion stock transaction shouldn’t surprise many, with Minneapolis-based Nash Finch struggling in recent years and the entire wholesale segment being challenged by a myriad of issues ranging from the declining number of independent retailers to the challenging overall competitive and diverse landscape their customers and corporately-owned stores face. The deal, which is expected to be completed by the end of the year, will see Spartan CEO Dennis Eidson remain as chief executive while Alec Covington, well-known to many in this region from his days at Richfood (and one of the smartest and nicest people in our business), will move on to other projects in what I’m guessing will be warmer climes…at Demoulas it’s a shame to report that there have recently been some more intra-family skirmishes to report. The Tewksbury, MA-based retailer which trades as Market Basket is one of the best-run regional chains in the country but as many of our readers know, family battles are often bitter and long lasting. CEO Arthur T. Demoulas fought off a board challenge led by his cousin Arthur S. Demoulas and will continue to oversee day-to-day operations at the high volume retailer. This is a battle that’s raged for decades between sons of founders Mike and George Demoulas with Arthur S. Demoulas losing a contentious legal battle several years ago. From a business perspective, it’s a ridiculous argument waged by the Arthur S. Demoulas camp primarily because, since he became CEO five years ago, Arthur T. Demoulas has increased sales by more than 50 percent and added 12 new stores including the family-owned chain’s new 120,000 square foot prototypes. Not only is Demoulas one of the most admired supermarket operators in the country, its $4 billion in annual sales with only 72 stores is a testament to its leadership…there are several obits to report this month including the sudden passing of Rick Sciulla at age 58. Rick was director of seafood for Weis Markets and a person I have known for many years dating back to his career at Ahold, USA. An extremely hard worker with a great personality, Rick will be missed. Also passing on was JJ Cale, one of the most unsung, yet influential rock and roll guitarists and songwriters of the past generation. Cale, 74, rarely toured and issued only about a dozen albums in a career that dates back more than 40 years, yet is one of those unusual figures who gained more respect from his industry peers than from the public. His best known songs were “After Midnight,” “Cocaine,” (both made famous by Eric Clapton) and “Call Me the Breeze,” (a big hit for Lynyrd Skynyrd). Neil Young, certainly one of the most iconic figures in rock history, stated in his biography “Shakey” that Cale and Jimi Hendrix were the best guitar players he ever heard. I was sorry to hear of the death of Dennis Farina, 69, the one-time Chicago cop who became one of the leading character actors of the past 25 years. Among his many memorable roles my favorite is his portrayal of Ray “Bones” Barboni, a bumbling, profane and hilarious Miami mobster in the great underappreciated movie “Get Shorty” (1995). And finally, passing away at age 97 was Page Morton Black. Many of you may not know who Page Morton Black is, but for the record she was the wife of Bill Black, the late CEO of Chock Full o’ Nuts coffee. The former professional entertainer is best known for singing the Chock Full o’ Nuts theme song (“Chock Full o’ Nuts is that Heavenly Coffee…”). Beyond that, my memory of Page Black was an unannounced visit to her estate in the Premium Point section of New Rochelle, NY made by my now retired partner, Dick Bestany, retired food broker David Finkelstein and myself. Finkelstein’s business partner, John Kluge, owned the estate adjacent to Page Black’s manse and, on a hot August night after a full day of fortification, the three off us decided to randomly pop in on Page who was a friend of Finkelstein’s. I’ll have to tell you the rest of the story in person, because what ensued proved to be one of the most unforgettable experiences of my life.