Taking Stock

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‘Round The Trade

Kings Food Markets last month announced that it has acquired the Old Greenwich location of Porricelli’s Market (Porricelli’s other store in Trumbull, CT is not part of the deal). Porricelli’s was founded in 1949 and has faced challenging high end competition in recent years, from retailers including Stew Leonard’s, Whole Foods, and, more recently Fairway Market. “At Kings, we share our love of food with our customers, and we’re excited to have the opportunity to introduce this passion to a new community to Old Greenwich” said Judy Spires, CEO of Kings. “Our goal is for customers to discover those moments in our stores where inspiration strikes, whether it’s finally finding a rare ingredient, creating a delicious menu using delicious menus from Kings’ chefs, or knowing they can rely on pairing suggestions and preparation tips from our associates. We know that Porricelli’s Market has been a pillar of the Old Greenwich community for 60 years, and we are committed to providing the same level of personal, attentive service that is truly the cornerstone of our brand experience.”…Stop & Shop will expand its gas rewards program to all of its New Jersey stores. The unit of Ahold USA initially launched its gas discount program (with partner Shell Oil) at its Stop & Shop units in New England and New York in 2010 (and also at its Baltimore-Washington area Giant/Landover stores; it has also long enjoyed great success with its own propriety gas program at its Giant/Carlisle unit). However, because fuel rewards programs were prohibited in the Garden State (is there a state in the union with more antiquated and whacky laws than New Jersey?) Stop & Shop was not able to expand its program. A new law passed earlier this year changed the rules and you can expect other retailers to jump on the gas rewards bandwagon shortly…with Fairway Market considering an IPO, it would have to look no further than Fresh Market to witness a real success story. The Greensboro, NC upscale merchant (which went public in 2010), which operates three stores in Pennsylvania and two in New Jersey posted tremendous numbers in its second quarter ended July 29. Net income jumped 26.9 percent and total sales increased 20.6 percent. Comp revenue rose a very healthy 8 percent and two of the most challenging metrics for all food retailers – transactions and transaction size – increased 5.3 percent and 2.7 percent respectively. The Fresh Market opened 11 stores during the first half of fiscal 2012 and expects to cut the ribbon on 3-5 more units before the end of the year, including its first store in California (Roseville). Next year another 14-16 new units are slated to debut. “A lot of retailers get excited about what they are doing and expand pretty fast and then have to close some stores,” said Craig Carlock, The Fresh Market’s CEO. “We want to be disciplined and thoughtful. Any retailer could open more stores, and so could we, but our plan is to hit (an annual growth rate of) 15 percent.” And other than Whole Foods, there has been no other food retailer as hot as The Fresh Market since the beginning of 2012…another IPO on the way is Safeway’s Blackhawk gift card division, which will be spun off in early 2013. The move makes a lot of sense, given the unparalleled success of Blackhawk and the recent struggles of Safeway’s grocery business. Analysts believe that the offering will be well received, but several Wall Streeters wondered if, without Blackhawk, Safeway’s weaknesses would be further exposed. Over the past several months, Safeway and its longtime CEO Steve Burd have been hammered over flat sales and an unwillingness to deal with some the chain’s underfunded pension plans. With more competition also threatening Safeway’s long protected West Coast business, the shedding of Blackhawk will certainly put more pressure on the chain’s core supermarket business…big news from “Snackland USA” in Central PA. Hanover based Utz Quality Foods has agreed to acquire certain assets of Reading based The Bachman Company. Utz will purchase the Bachman brands (which also include Jax and Thin ‘n Right and Chipitos), its distribution, its intellectual property and its manufacturing facility in Ephrata, PA. Bachman will retain ownership of its Reading manufacturing facility and will continue to produce salted snack items for Utz and other companies. The 125-year old privately-held firm will change its name to Savor Street Foods. The deal is expected to close later this month. Down the street in Hanover, Snyder’s-Lance (which also operates from Charlotte, NC) has agreed to acquire Snack Factory for $340 million in an all cash deal. Princeton, NJ based Snack Factory, makers of Pretzel Crisps, was founded in 2004 by Sara and Warren Wilson (who also founded New York Bagel Chips). Snyder’s-Lance said it should consummate the purchase early in its fourth quarter…earlier this month Sheetz announced that will build a new $32.8 million distribution and food production center in Burlington, NC. The new 245,000 square foot center is a key element in the c-store retailer’s rapid expansion plan for new convenience restaurants, particularly in the Virginia and North Carolina markets. The depot will look much like Sheetz’s facility in Claysburg, PA (Blair County). The Burlington center, which is slated to open in December 2014, will produce sandwiches, salads and other convenience foods. It will create 254 new jobs. Sheetz, based in Altoona, PA, currently operates 429 c-stores, with 46 of those units located in the Tar Heel State and an additional 59 units in Virginia…also based in Virginia is Relay Foods (www.relayfoods.com), which recently announced that it has expanded its online home delivery service – featuring 11,000 grocery items – to the Philadelphia, Baltimore, and Washington metro areas. The Charlottesville based firm, which also currently services customers in the Richmond area, said it recently raised $1.2 billion in new capital that helped fund this expansion. The company will also establish convenient pickup locations in each market and upgrade its website, which they believe will accelerate the “personalization of the shopping experience beginning with a customer’s initial visit to the site.” According to Zach Buckner, CEO, “Relay Foods is designed to efficiently serve a range of customers – from professionals and parents managing households, to people who care deeply about access to farm-to-table produce and the finest artisan foods, and of course, like to avoid the crowds and hassles of today’s grocery retail environment. We are proud now to offer even more products from the region’s most socially and environmentally responsible farms and artisan food vendors.”…Baltimore based McCormick & Company has opened its first retail store called McCormick World of Flavors. The new 3,800 square foot entity is located on the first floor of the Light Street Pavilion at Harborplace at Baltimore’s Inner Harbor, very close to the original McCormick plant and headquarters that stood at 414 Light Street. “The opening of McCormick World of Flavors is an exciting new way to connect with millions of people who love food and flavor,” said Alan Wilson, McCormick chairman, president and CEO. “Visitors will have the opportunity to interact with many of our brands from around the world as we showcase how we bring flavor to their lives each and every day. Having a retail destination in the Baltimore Inner Harbor brings us back to our roots, offers visitors a chance to have fun, learn and engage.”…Redner’s announced just before presstime that it has signed a lease to build another new store in Dover, DE. This unit will be 48,500 square feet in size and will be located in the Greentree Shopping Center. It is tentatively slated to open next summer and joins other First State Redner’s Warehouse Markets in North Dover, Milford (opened last month) and Camden (set to open later this year). And on September 12, Redner’s cut the ribbon on its newest store in Hegins, PA (its third unit in Schuylkill County and 42nd overall). The Hegins store is 40,000 square feet in size and features a fuel station…A&P has reopened its Pathmark store on Old Bridge, NJ, a week after a tragic shooting in which a store employee shot and killed two co-workers before killing himself. The incident occurred before the store opened the morning of August 31 and police are continuing their investigation. This is truly a sad, sad story…also sad is the passing of a couple of legends from the entertainment and sports world. Phyllis Diller, 95, left us last month. And while she was not everybody’s cup of tea, Phyllis Diller was truly a pioneer. She didn’t get into comedy until she was nearly 40 (she was a successful advertising and radio writer before that). While she may not have been the first female stand-up comedienne, she was the first to become a star. She influenced other female comics such as Joan Rivers, Ellen DeGeneres and Chelsea Handler and she remained active until 2009. Also departing mortality was Steve “Wham Bam” Van Buren, the Hall of Fame running back who led the Philadelphia Iggles to NFL championships in 1948 and 1949. The former LSU star was the Eagles’ first round pick in 1944 and finished an eight-year career by rushing for 5,860 yards and 77 touchdowns. He was named All-Pro five times and was selected to the NFL’s 75th anniversary team in 1994. He was also the first Eagles player inducted into the Pro Football Hall of Fame. Following his retirement in 1952, Van Buren resided in Lancaster, PA. He was 91… a final word about A&P’s decision to unload its Food Emporium division. Way back when (in the 1980s), the Food Emporium model was unique and very well run. But those days have been ancient history for quite some time as the Tea Company operated its Manhattan stores with its typical reverse Midas touch. It didn’t surprise many that Food Emporium would be chairman Ron Burkle’s first “dumping,” because, despite its poor operations coupled with superior and newer competition from the likes of Whole Foods, Fairway and Trader Joe’s, Food Emporium still should attract many prospective buyers because of its real estate value. Where else can you find 16 stores in the 20,000 square foot range in the country’s largest
and best demographic area? This reporter likes Trader Joe’s (owned by the wealthy Albrecht family) as the early favorite, although this deal could also set up well for a financial/private equity player. And, once Food Emporium is moved, I still expect A&P to start selling off other assets, particularly those stores in the Delaware Valley market.