Taking Stock

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Local Notes 

Ahold USA has postponed its annual vendor meeting which was originally scheduled to be held on October 29. The new date is March 11, 2014 and the location of the meeting will still be the Giant Center in Hershey, PA. According to the company, “We realize that all of us, as suppliers and retailers are extremely busy during the 4th quarter and having the meeting in late October would not be the best time to interrupt our planning and preparation for the busiest time of the year. We apologize if our change in plans causes you any inconvenience. We promise that we will be well prepared to present the type of meeting you have become accustomed to with Ahold USA; one that is informative, interesting and exciting.” The Northeast’s largest retailer has opened its new 163,650 square foot case-ready meat plant in Camp Hill, PA that will service more than 300 Giant/Carlisle and Giant/Landover units. A shout-out to the many fine folks at AUSA’s Giant/Carlisle unit which earlier this month officially marked its 90th anniversary with a special celebration in its hometown. The regional chain culminated 90 days of giving throughout the grocer’s local communities with a $9,000 donation to Project SHARE, an interfaith, non-profit cooperative effort, based in Carlisle, created to meet the needs of the hungry by providing supplementary food and nutritional education on a monthly basis…interesting story in the New York Times about John Catsimatidis, owner of Gristedes, who failed to win the Republican nomination for mayor of New York City last month. According to the Times, “Big John” spent $10.4 million on his campaign and received fewer than 25,000 votes. That works out to $419 per vote, far more than the Joe Lhota who won the Republican primary (Lhota spent $3.8 million – $119 per vote). Democratic primary winner (and probably the next mayor of New York) Bill de Blasio spent $6.8 million or $24 per vote on his campaign…Whole Foods made it official earlier this month: it will be building a 29,000 square foot store in the former Hahne & Co. department store in downtown Newark, NJ. Whole Foods will join ShopRite as retailers who will be debuting brand new stores in what once was one of the most downtrodden cities in the U.S. Credit Newark Mayor Cory Booker (who’s also running for the U.S. Senate) for attracting both retailers to what is now becoming a truly gentrified urban community… staying in New Jersey, Village Super Market Inc., the second largest Wakefern member with 29 stores (two in Maryland), reported that its net income decreased 31 percent in its fourth quarter ended July 27. The Springfield, NJ based high volume retailer said the decline was caused by lower gross profit percentages and higher operating expenses as a percentage of sales. Overall revenue was $376.3 million in the fourth quarter, an increase of 1.7 percent, from the fourth quarter of the prior year. Same store sales also grew by 1.7 percent. The ShopRite merchant said sales continued to be impacted by economic weakness, high gas prices and high unemployment, which has resulted in increased sale item penetration and trading down. The retailer expects same store sales in fiscal 2014 to increase from 1.5 percent to 3.5 percent. For its full fiscal year, net income was $25.8 million compared to $31.4 million in fiscal 2012. Those figures include income from partnership distributions of $840,000 (net of tax); income from the national credit card lawsuit of $693,000 (net of tax); and a charge for the settlement of a landlord dispute of $376,000 (net of tax), while fiscal 2012 includes a favorable settlement of a pension withdrawal liability of $374,000 (net of tax). Excluding these items from both fiscal years, net income in fiscal 2013 declined 21 percent compared to the prior year primarily due to lower gross profit percentages and higher operating expenses as a percentage of sales, partially offset by reduced losses in the two Maryland stores compared to the prior year, which was their initial year of operations. Sales in fiscal 2013 were $1.48 billion, an increase of 3.8 percent from the prior year. Sales increased due to the acquisition of a store in Old Bridge, NJ on January 29, 2012 and a same store sales increase of 2.9 percent…here’s an example of why I believe the view of many Wall Street analysts who cover the grocery industry is misguided. Costco recently released its fourth quarter and year-end financials. For its fourth quarter (ended September 1), the Issaquah, WA-club store retailers posted an overall sales increase of 0.8 percent, a comp store gain of 5 percent (in the U.S.) and its earnings rose 1.3 percent to $617 million. And Costco’s fourth period this year was 16 weeks compared to 17 weeks last year. Additionally, Costco’s CFO Richard Galanti told analysts that 36 new stores are planned to open in fiscal 2014 and the high-volume merchant plans to increase its cap-ex from $2.1 billion to $2.5 billion next year. I’d say those were pretty strong numbers delivered by one of the industry’s best retailers, especially given the state of the economy and the ferocity of the competitive landscape. Apparently, I must be reading from a different hymnal, because the view of many financial analysts was that Costco’s numbers were “disappointing,” “soft,” or “struggling.” You gotta wonder if many of these Wall Street residents have recently gotten off their butts and visited a Costco store…FreshDirect, which is battling Ahold’s Peapod unit and will soon go head-to-head with a ramped-up Amazon in the online grocery segment, continues to broaden its footprint as part of its own expansion plan. The New York City based merchant last month added 15 new zip codes of home delivery in the Wilmington, DE area in addition to more than 100 new zip codes that FreshDirect began servicing in New Jersey, Philadelphia and Rockland County, NY…a couple of deaths to report this month. Passing on was the great American novelist Tom Clancy who died at age 66. Clancy was an insurance salesman working at his father-in-law’s agency when he sold his first novel, “The Hunt For Red October,” for only $5,000 in 1985. His detailed understanding of and skill writing about the Cold War made him an instant celebrity. All told, Clancy published 17 novels that rose to number one on the New York Times bestseller list, including “Patriot Games” and “Clear And Present Danger.” His upcoming book, “Command Authority,” is due to be released December 3. On a personal note, I am deeply saddened to report the death of Bill Speakman, 73, who for the past 35 years served as secretary-treasurer of our company, Best-Met Publishing. Bill was much more than the financial guru of Best-Met, he served as confidant, friend and many times inspiration to me. In fact, when Dick Bestany and I acquired Food World in 1978 (and Food Trade News 18 months later), he not only engineered the deal, he told us where to set up shop and developed our first year budget. Along with being one of the most intellectual people I’ve ever met, Bill also possessed a keen street sense and uncanny ability to read people and quickly assess the situation at hand. He was a person who made a big difference in my life and I’ll miss him dearly.