‘Round The Trade
UFCW Local 152’s clerks and meatcutters at 15 South Jersey ShopRite units late last month ratified a new 16 month contract (another short-coded agreement due to the still unclear direction of the Affordable Care Act). The new pact, which covers about 2,500 workers, was agreed to after three months of negotiations between the union and Wakefern. The new deal includes a boost in wages and an increase in pension contributions by the retailer while health benefits that do not require cost-sharing by the members are maintained. “These were painstakingly difficult negotiations because of the uncertainties surrounding the Affordable Care Act,” said Brian String, president of the Hammonton, NJ-based UFCW Local. “Fortunately, both the union and the company were willing to roll up their sleeves and work on a solution. Maintaining the workers’ excellent health benefits was the primary concern of the union’s lead negotiating team and a 20-member negotiating committee of rank-and-file ShopRite
members. That was our goal and I’m proud to say we accomplished it. The absence of cost-sharing makes this contract one of the last of its kind in the industry. We did everything we could to continue the strong benefits
package for members,” he said, noting that ShopRite agreed to increase its health and welfare contributions by 19 percent over the course of the contract. On a broader scope, the UFCW International is reaffiliating with the AFL-CIO after an eight-year break with the national labor federation. “We join the AFL-CIO because it is the right thing to do for UFCW members, giving them more power and influence,” said UFCW president Joe Hansen. “This is not about which building in Washington, DC we call home – it is about fostering more opportunities for workers to have a true voice on the job. Attacks on workers brought the UFCW into direct strategic partnership with the AFL-CIO and made it clear it was time for the UFCW to redouble our efforts to build a more robust and unified labor movement.”…great move by Newark, DE-based Produce Marketing Association (PMA) last month when it hired ex-Food Lion president Cathy Green Burns as its new president. She will report to PMA CEO Bryan Silbermann as the growing trade organization seeks to continue the dynamic growth it has achieved over the past decade…several 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 its earnings per share increased $0.04 to $0.90 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 quarter.”…bolstered by increased sales at its Food Lion unit, Brussels-based Delhaize Group posted improving numbers at its U.S. stores in its second quarter. Overall revenue increased 0.4 percent to $4.25 billion, comp store sales rose 1.1 percent and underlying profits grew by 4.9 percent to $162 million, marking the third consecutive quarter of modestly improved sales and profits. The company noted that price investments at both its Food Lion and Hannaford banners helped drive increased revenue and added that it has reduced its losses at its Bottom Dollar division. While I’ll give new Delhaize America CEO Roland Smith credit for taking the drastic action needed to stem the bleeding, as long as Food Lion remains the straw that stirs Delhaize’s drink in the U.S., I don’t see a major long-term “win” for the international chain. A better indicator will come when the retailer has to cycle its margin reduction numbers next year…at Wal-Mart, second quarter comps were down 0.3 percent at its U.S. stores. The company said the dip in same-store revenue
resulted from low inflation and some price deflation in categories like dry groceries, snacks and frozens. Bill Simon, CEO of Wal-Mart U.S., noted that trading down was also a factor, “…particularly in the categories where product loyalty is not the primary factor in a purchase decision.” Simon added that increases in produce comps were in the mid-single digits and that the positive effects of an internal program to improve employee training also aided sales through the 13 week period…the National Frozen and Refrigerated Association has named its March Frozen Food ‘Golden Penguin” winners. Among those in our region who were recognized were: Wakefern Food Corp. (co-op wholesaler); Bozzuto’s (corporate wholesaler); Ateeco Inc./Mrs. T’s Pierogies (branded manufacturer); Acosta (military sales agent); Douglas Sales Assoc. (retail sales agent); Weis Markets, assisted by Crane Communications Inc., (retail corporate chain or division over 50 stores)…some regional and national news of note: in adjacent markets, Supervalu has dispatched its second regional chain president. Bill Parker, a holdover from the old Supervalu network, has exited the helm of Virginia Beach, VA-based Farm Fresh and was replaced on an interim basis by Chad Ferguson, an ex-Kroger exec who came on board at Supervalu shortly after the Cerberus/Bob Miller/Sam Duncan team gained control last March. Last month, Shoppers Food & Pharmacy president Bob Bly left the Baltimore-Washington unit of Shoppers. Also Shaw’s (now part of the Cerberus network) announced that another round of store closings. The West Bridgewater, MA chain is shuttering six of its 34 units in New Hampshire – Seabrook, Goffstown, Tilton, West Lebanon, Manchester and Keene. A week later Stop & Shop (Ahold USA) said it would close its fleet of six stores in the land of “live free or die” – Hudson, Exeter, Bedford, Milford and two Manchester stores. The underlying story here just might be the mighty clout that Demoulas Market Basket holds in the most densely populated areas of the Granite State…I’m sure many of you read the Bloomberg piece on C&S chairman Rick Cohen. Not only was the story interesting, but it revealed a lot about the “mystery” behind one of the most innovative and successful executives, not only in the grocery business but when in the world. Among the nuggets in the story: Cohen’s net worth is $11.2 billion, making him one of the 100 wealthiest people in the world; as the owner of a privately-held firm, Cohen lets C&S’ corporate income pass through to be taxed as personal income to avoid double taxations; and in 2009 (based on Bloomberg research) the
Keene, NH wholesaler had approximately $240 million in outstanding bonds and achieved a gross profit margin of 2.2 percent on net income of $19.3 billion. Bloomberg estimated C&S’ current annual volume to be $21.7 billion. I’ve probably gotten about 50 phone calls and emails about this story, but one person I’m certain I won’t be hearing from is Rick. That’s because he is one of the most private, low-key executives in the grocery business, and one who doesn’t grant interviews and doesn’t make many public appearances (unless it’s customer-related or for a philanthropic cause). Despite the flattering remarks in the story, I can’t believe Rick’s happy about all the new publicity…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.