A&P: Same Bad Retailing, Only Worse
New ownership, constantly evolving management teams, sweepstakes, contests and games – it really doesn’t matter which era of A&P you want to scrutinize from the past 35 years, the results are generally the same. Sure, you might think that Ron Burkle and his Yucaipa team (chairman Greg Mays and CEO Sam Martin) would actually try to become more competitive once the company emerged from bankruptcy, wiping away a huge debt from supermarket chain’s balance sheet.
Think again.
In fact, there are many who would argue that the A&P of today is even worse than it was in the waning days of Christian Haub’s 30 year magical mystery tour at the Montvale, NJ based retailer (except perhaps Yucaipa, which now holds millions of dollars worth of real estate and also gained major economic concessions for A&P’s labor unions and a new streamlined contract from its primary supplier C&S).
Where are the new and significantly remodeled stores that we thought were on the way? Oh, I guess I must have been out of the country when the new batch of “ribbon cuttings” occurred after the Pathmark in Weehawken, NJ was remodeled shortly after Burkle & Co. took the helm. How about the innovative marketing and merchandising approach that the now privately-held supermarket chain was going to develop to gain market share against existing operators ShopRite (which should pray daily that A&P sticks around for a long time) and Stop & Shop while at the same time neutralizing growing emerging competitors such as Wal-Mart, Whole Foods, Wegmans and retailers from other channels who have drank from the A&P trough for many years?
OK, Ron Burkle is a brilliant guy. His financial track record in the supermarket industry over the past 40 years illustrates that he’s netting a lot more than one percent annually from the business he started in. But in the retailing world of 2013, it’s simply too difficult to actually compete on the playing field – especially if you play the game like the (once) Great Atlantic & Pacific Tea Company. So should it be surprising that Credit Suisse is exploring A&P’s future options? If I pulled off a deal where I controlled much of the company’s real estate and gained major givebacks from my two largest payroll factors (unions and supply chain), why wouldn’t I want to “get out of dodge” knowing that since Yucaipa gained control of A&P in March 2012 sales have continued to be generally poor. And throw in the possibility that New Albertsons/Cerberus might be looking to sell some or all of its retail banners (including Acme) within the next 12-18 months – that might be an additional incentive to want to sell stores.
But wait, A&P still has to operate stores. And with double-digit declining sales (according to recent syndicated data), a fierce competitive landscape (both in Philadelphia and Metro New York) and apparently no significant cap-ex being directed toward improving its old and tired store base, it looks like the new management team has dusted off the playbook of former A&P CEO Jim Wood from the early 1980s. Some of you might remember its unofficial title: “Pay Me First And I Might Actually Sell Something (but don’t hold me to it).”
Actually, the Tea Company has been a member of the “pay to play” church for even longer than Wood’s long reign at the company. But recently, A&P has put a different twist on that ancient, weary and beaten dead horse.
In a memo dated September 25 sent to “all vendor partners,” A&P informed its suppliers, distributors and brokers that it is now capable of automatically invoicing them on the same day via email. The memo was issued by A&P’s current CFO Bill Barrett, who joined A&P 10 months ago (making him a seasoned veteran at the chain), and noted that the retailer has two options available for the payment of invoices: 1) Immediate deductions from accounts receivable (direct vendor accounts) or via C&S (indirect vendor accounts or 2) Immediate deduction via a vendor maintained pre-payment account at A&P sufficient to cover future invoices. The memo also notes that “if you are not using these options today, your account will default to ‘Option 1,’ effective October 1.
One can only imagine how delighted the vendors were when they received Mr. Barrett’s missive.
I sensed that by the volume of emails and phone calls I received and the unfiltered expressions of emotions that followed.
“I’d very much like to support the ‘Bank of A&P,’ but my clients may object to this,” said a senior executive at a large food brokerage organization whose company has been calling on A&P for many years. “I’ll have to check on how enthusiastic my clients are about putting money in their account to collect interest.”
“Isn’t C&S getting a slice of the pie already?” another executive at a direct sales company caustically wondered. “Do they need to be part of A&P’s act of desperation?”
Of the approximately 12 vendors (brokers, DSD firms and direct sales companies) that I talked to about this new policy not one gave the new program any validity. All saw the invoicing and collection policy for what it is: a money grab.
I asked all of my contacts to try to be more objective and find a positive spin in judging this program. Only one did and his response was:
“Since A&P is one of our biggest deduction scofflaws in relationship to the cases they sell, maybe you could argue that keeping a small amount of money in a pre-paid account would offset the man-hours used and the headaches created when chasing their deductions which can take months to be repaid even when we’ve proven our case – and we’re right more than 90 percent of the time,” an A&P team leader for a large snack food company offered.
What a great compliment. It really is like déjà vu all over again, except the mindset of the vendor community is much different than it was even five years ago. Other than the small or regional vendors who count on A&P’s business for their survival (and they will be hurt if they don’t comply), the majority of the brokers, distributors and manufacturers who call on the Tea Company, and control an overwhelmingly large percentage of sales, aren’t going to be bullied.
A&P is no longer important in their universe. If the punishment for non-compliance is the delisting of items, the larger suppliers won’t blink and A&P will be worse off for it. Those vendors and brokers are going to spend their discretionary funds with accounts that are growing and can assure them of a fair return on their investments.
Their collective unspoken message to A&P is clear: Why don’t you try selling something?
Private Equity Accelerating Interest In Supermarkets
So it’s come to this. Are you a bona fide merchant or just another retailer whose primary focus lies in seeking to maximize profits each and every quarter? Those lines are a lot blurrier than they have ever been and that’s great news for private equity firms who are back big-time in the supermarket acquisition business.
Actually, it’s pretty easy to separate the true merchants (be they publicly-traded corporate chains, privately-owned regional retailers or local independents), who are aggressively trying to move more boxes and whose vibe is clearly evident once one enters their stores (Wegmans, Kroger/Harris Teeter, ShopRite, Whole Foods, McCaffrey’s and Trader Joe’s) from the earnings chasers, who clearly care more about meeting quarterly guidance expectations than they do in how their stores are viewed by their current customers when judging such critical touch points as training, staffing, pricing, private label perception and overall shopping experience. Of course, there’s the “all other” category which consists of companies that seem somewhat clueless (Delhaize America, A&P) or are organizations that are attempting to dig themselves out of such deep holes that their current grade reads “incomplete” (Supervalu).
I recognize that we’re not living in North Korea and that profits are a good thing. Only not as good as when those profits are achieved at the expense of selling more cases (and units) with secondary regard to what’s rung up at the register.
And that again leads me back to my main point – if you’re in the private equity/venture capital business, mediocrity or decline is good when evaluating a potential retailer to target. And right now, business is very good in the PE world with even greater promise on the horizon.
After a lull of about a decade, private equity, led by Cerberus Capital Management, has been on a tear over the last 18 months. During that period, Cerberus and its subsidiaries have acquired or taken control of Supervalu (including its former Albertsons stores which were spun off into a separate unit) and United Family Markets. Cerberus also came in second place in the Harris Teeter auction and is reportedly hot to trot to acquire Safeway. During that same period Dallas, TX-based Lone Star Funds (and its affiliates) acquired Winn-Dixie and combined it with Bi-Lo (which it acquired in 2005) to form a solid base in the Carolinas and Florida (it also acquired 165 Sweetbay, Harveys and Reid’s units from Delhaize America to bolster its presence in Florida, Georgia and South Carolina). Other active PE players in the supermarket division are Yucaipa Cos. (which owns A&P and is currently on the trail of Tesco’s Fresh & Easy stores on the West Coast) and Empire Cos., which recently acquired Safeway’s 233 store Canadian operation.
Expect the trend to continue. Why? Because private equity is currently looking at a “perfect storm” scenario. With very deep pockets and a resurgent debt market, supermarkets are prime targets because of the real estate they own or control, the large amount of cash they generate and the general undervaluation of the companies’ stock price.
And while one could argue that private equity’s ownership has created improvements at the companies they purchased, none of these PE-driven deals has resulted in transforming any of these retailers into honor roll performers. Then again, when your modus operandi is to squeeze out the assets, manage the overhead tightly, treat cap-ex conservatively and then ultimately flip the investment, how can greatness ever be expected?
Of all the recent supermarket deals consummated, only Kroger’s acquisition of Harris Teeter (which is not yet finalized) was executed by a strategic player whose share price was already well above the industry norm and whose management consistently focused more on the top line than the bottom one.
So, what do Winn-Dixie, Supervalu, New Albertsons and A&P have in common? Their performance grades were “C” or lower, but they all possessed the qualities that PE desires: real estate, cash flow and disappointing stock price.
And while Safeway’s performance is above those other PE-acquired chains, the Pleasanton, CA operator possesses many of these same core attributes. And because of the obsessiveness to eliminate waste by former CEO Steve Burd, Safeway is very streamlined to become somewhat of a turnkey operation for a prospective financial buyer.
I’ve said this many times before: when a company hires a Wall Street firm (Goldman Sachs) for advice or to explore its future options, that company is as good as sold. In Safeway’s case, I wouldn’t make book on it, although I’d still make a decent sized wager that it will happen. Shareholders have been disappointed with Safeway’s performance for several years and new CEO Robert Edwards seems all about maximizing shareholder value (a sale of the company or even rumors of a sale are a good catalyst to lift share price).
For Safeway, it doesn’t seem like there’s a strategic buyer interested, but there may be more than just Cerberus bidding among PE firms.
While it’s not always an indicator of final destination, it should be noted that a number of key Safeway executives have sold significant blocks of stock in the past six weeks since Jana Partners amassed its 6.2 percent stake and the Cerberus speculation arose. President Robert Edwards sold 273,000 shares (a cash out of nearly $9.1 million); executive VP-marketing Diane Dietz sold almost 300,000 shares of Safeway stock (worth about $10.5 million); and executive VP-human resources Laree Renda sold 50,000 shares (valued at approximately $1.8 million).
Other Safeway senior vice presidents who sold significant shares include: Robert Gordon (151,000 shares valued at more than $5 million); Jerry Tidwell (44,000 shares worth $1.5 million); David Stern (5,000 shares worth almost $165,000); and Russell Jackson (2,800 shares valued at almost $100,000).
There’s nothing illegal or immoral with company executives reaping the rewards of their hard-fought efforts. On the other hand, doesn’t it make you think that they believe that initial private equity interest may serve as the catalyst for bigger things to come?
There’s definitely smoke here. It won’t take too long to recognize whether there’ll be fire, too. Not only at Safeway, but at other retailers that possess the formula that the newly emboldened private equity firms desire.
‘Round The Trade
After six years of operating control, Morgan Stanley Capital Partners (MSCP) has sold its 66 percent stake in Buffalo based Tops Friendly Markets to six current executives including veteran top CEP Frank Curci. No great surprise here as MSCP has been looking for an exit strategy for quick a while and a public offering didn’t seem likely since the regional chain lost $9.5 million during the first six months of 2012. Along with Curci, the other Tops executives included in the deal are: Kevin Darrington, COO; Rick Mills (former Weis exec), CFO; John Persons, SVP-operations; Jack Barrett, SVP-HR; and Lynne Burgess, SVP-general counsel. Terms of the deal were not disclosed, but you can bet that Curci & co. got a cool deal since MSCP’s options were limited and the management group has done a solid job in improving the organization since MSCP acquired Tops from Ahold USA six years ago. (Curci served as Top’s CEO when AUSA owned the retailer). You can also expect a further refinancing plan to be announced after this deal closes by year’s end…While many retailers are continuing to face another prolonged period of soft sales, the November 1 federal government reduction of SNAP (Supplemental Nutrition Assistance Program) benefits will only add more salt to their wounds. The government mandate cutback affects 47 million families. On a monthly basis that means household reductions of $11(one person), $20 (two people), $29 (three people) and $36 (four people). That’s a big number to swallow especially when retailers have seen SNAP usage escalate in recent years to where 5-8 percent of total sales for a typical store are comprised of food stamp usage. And it may even get worse if the House of Representatives get its way. The House wants to cut an additional $40 billion from the food stamp program as part of the pending new Farm Bill…Kroger has named 38-year veteran Mike Ellis president and COO effective January 1, 2014. Ellis will assume the post held by Rodney McMullen, who will replace retiring Dave Dillon as CEO. Ellis, 55, is currently senior VP of Kroger’s retail divisions. Just before presstime, Kroger held its annual “investor day” in New York. Key takeaways from the meeting included the big Cincinnati chain’s desire to accelerate its “fill-in” strategy by adding stores in both existing markets and newer areas (think Baltimore-Washington market after the Harris Teeter deal gains FTC authorization). Outgoing chief executive Dillon noted that while market adjacencies are important, Harris Teeter would have been a prime acquisition candidate no matter where it operated because of strong management, a reputable name in its markets and an established infrastructure. Dillon also inferred that the Internet won’t be as dominant in food purchasing as some analysts believe. “I wouldn’t be too quick to assume that the leap to home delivery ends up replacing everything,” he noted, adding that there remains a large percentage of customers that like to get out and have interaction with friends and neighbors in their community as they walk through the store…now that U.S. Bankruptcy Judge Kevin J. Carrey has granted court approval for a November 19 auction, it looks like the path has been cleared for Yucaipa Cos. to officially bid on about 150 Fresh & Easy stores on the West Coast that current owner Tesco seeks to dispose of. As per Carrey’s ruling, made last month in Wilmington, DE, all potential buyers must submit offers by November 15. The company would hold the auction only if it receives a competing qualifying bid. If that happens, a hearing on November 21, would determine the auction winner. There was also an interesting piece on nasdaq.com reporting that, knowing it was losing money ($22 million a month) and facing bankruptcy, parent firm Tesco pulled $215 million out of Fresh & Easy to cover other company expenses and possibly make it easier for potential creditors that were not paid (due to the bankruptcy) to sue to challenge the sale of Fresh & Easy to an interested party such as Yucaipa Cos. The nasdaq.com story notes that of the funds pulled out of Fresh & Easy, $18.9 million was used to repay debt owed Tesco; another $10 million went to cover Tesco payroll costs in the U.K. and India; and $15 million was termed “all other payments.”…remember Hank Mullany, ex-Genuardi’s president, who also headed Wal-Mart’s Northeast business and later served as CEO of ServiceMaster? Mullany has a new job as president of Toys “R” Us, where he will oversee all U.S. merchandising, marketing, e-commerce and store ops for the struggling 878 store toy firm which is based in Wayne, NJ, not too far from his Philadelphia roots…it was another flat quarter for Wal-Mart in the U.S. as comp store sales decreased 0.3 percent in its third quarter ended October 25. Additionally, grocery comps dropped 0.7 percent for the 13-week period. On the earnings side of the ledger, the Behemoth’s profit increased $3.6 billion to $6.3 billion. At its Neighborhood Markets banner, which is targeted for major expansion in the next two years, comp store revenue rose 3.4 percent. And, a few weeks earlier at its annual investor conference held in Bentonville, AR, Wal-Mart said it expects earnings this year to fall in the 1.9-3 percent range compared to the five percent earnings increase it achieved last year. Moving forward, the Behemoth also said it plans to reduce its cap-ex in fiscal 2015 by approximately $200 million (to $11.8-$12.8 billion). “We’re spending in a disciplined manner by setting up a more streamlined real-estate process,” Mike Duke, president and CEO, stated. “As we continue to improve our sales per square foot, Wal-Mart will continue to grow through new stores and e-commerce while expanding our logistics and fulfillment network in critical markets.” The world’s largest retailer said it plans to open 115 supercenters in fiscal 2015, compared with 125 this year; and will also accelerate the growth of small-format stores, mostly Neighborhood Markets, projecting between 120 and 150 next year, compared with 120 this year. According to Bill Simon, president and CEO of Wal-Mart U.S., “We will accelerate growth of our Neighborhood Markets because of their strong returns, consistent comp-sales performance and double-digit net sales increases; and we will continue to build and leverage the supercenter format, which remains our primary format for growth. The combination of our large and small-store formats allows us to strengthen our market share position and give customers convenient access to shop for food and general merchandise, as well as access to our e-commerce offerings. We believe our multi-format portfolio will fuel the next generation of retail; enable the convergence of digital and physical store locations through e-commerce; and unlock value, giving our customers anytime, anywhere access to Wal-Mart.”…now that the Affordable Care Act has moved into its next phase of implementation, organized retailers and their local UFCW unions are finding it more difficult to hammer out new agreements. Such is the case in Metro New York where retailer clerks and meatcutters at Local 1500 are continuing to bargain with Stop & Shop & King Kullen over new multi-year contracts. All parties are still talking beyond the original September 28 deadline and Local 1500 president Bruce Both has clearly singled out “Obamacare” as a significant obstacle in getting a deal done. Another group of contracts that has been extended, in part due to “Obamacare” options are the ones that Safeway and Giant/Landover are bargaining with UFCW Locals 27 (Baltimore) and 400 (Washington). Those agreements expired on October 31 and have now been extended twice (no through December 20). While negotiating continues, Local 400 members have voted to authorize strikes against both chains (Local 27 has not). “Our members put Giant on notice that it is long past time to come to the table with a proposal that provides them with the security, respect and dignity they have more than earned,” said Local 400
president Mark Federici. “It is our members whose hard work, unmatched productivity and outstanding customer service that made Giant so profitable and the dominant grocer in the Washington, DC metropolitan area. All our members ask of management is a fair deal that reflects all they contribute to the bottom line. No one wants a strike, but if that is the only way to get a contract providing living wages and health and retirement security, that is what we will do.” Federici also acknowledged that “the big issue at the table has been health care.” One more note about Giant/Landover: Gordon Reid has been named president succeeding Anthony Hucker (now at Schnuck’s) who resigned in September. Reid, a Scotsman, has never worked in the U.S., having toiled for Tesco and most recently for Dairy Farm in Europe and Asia. He will try to provide stability at the Landover, MD-based Ahold USA unit as that top job has become a revolving door in recent years (Hucker, Robin Michel and Bill Holmes).
Local Notes
It was a challenging third quarter at Weis Markets. The Sunbury, PA-based regional chain posted a 31.9 percent dip in earnings for the period September 28. Profits were $11.7 million for the period and both overall sales (negative 1 percent) and comp store revenue also declined (negative 2.9 percent). Weis said that “stagnant” center store sales in certain categories and significant deflation in fuel costs contributed to the volume drop. The closely-held regional chain took a $2.1 million impairment loss on four properties and also posted a $6.1 million charge related to the separation agreement with former CEO Dave Hepfinger who resigned in September. Weis said it recently has stepped up its promotional and sales building activities and expanded its loyalty marketing efforts to ignite sales in its fourth quarter. More Weis stuff: Mike Mignola, senior VP-store operations, who was one of Hepfinger’s first hires from Price Chopper, has left the organization and the retailer has appointed John Neuberger as VP-operational administration where he will oversee the retailer’s store support functions including budgeting, sales and labor, net income performance, best methods for operations and retail efficiencies, inventory shrink and total store customer service. Neuberger is a Price Chopper alum. Joining Weis, too, are Marie Underkoffler as director of compensation and benefits and James Murphy as director of construction. November is a very busy month for the regional chain as well with ribbon cuttings at its two State College, PA units (remodelings), a new store in Huntingdon Valley, PA (a former Pathmark) and the unveiling of major remodelings in Danville, PA; Brodheadsville, PA; Odenton, MD and Pasadena. MD…at Supervalu, the turnaround continues as the slimmed down company earned a net profit of $40 million in its second quarter ended September 7. A year ago, SVU posted a loss of $111 million. While CEO Sam Duncan noted that he was pleased with the company’s accomplishments, he added that “we must remain focused on driving sales and generating cash. A big difference made during last year was at its corporately-owned Save-A-Lot discount unit where same store sales increase 4.6 percent. Including its Save-A-Lot licensed stores (about 75 percent of the fleet), same store revenue decreased 0.3 percent, still an improvement over recent quarters. Sales at SVU’s wholesale grocery (independent business) segment declined 1.6 percent to $1.84 billion and same store sales at its five conventional retail banners (Shoppers, Farm Fresh, Shop ‘n Save, Cub and Hornbacher’s) were at negative 0.9 percent, as compared to negative 3 percent in SVU’s first quarter (same store sales numbers have been negative every quarter dating back to 2008). Clearly, Duncan and his team have done a fine job over the past nine months with limited resources. Like a lot of turnaround stories, much of the early saving have resulted from “trimming the hedges,” rather than significantly increased sales. However, Duncan and chairman Bob Miller are now running the business professionally and are much more focused on execution and problem solving. On the obverse side of the coin, the significant cap-ex investment that’s sorely needed to improve its current store base and build new units hasn’t materialized yet and the competition in all of the company’s markets continues to become more aggressive and diverse. For corporate parent Cerberus, the deal is already a great one, having paid $4 a share for 30 percent of the company and operating control (at the close of business on November 18, SVU shares were trading at $6.88). And like many other PE companies, Cerberus still has assets it can potentially sell – its five conventional supermarket banners as well as Save-A-Lot. So, from an investment perspective, the deal is already a home run. And even from an execution point of view, the company is far better off than it’s been in at least five years. But, taking in the full view, SVU is not gaining significant traction or market share in any of the areas in which it operates, hasn’t spent enough yet to indicate it wants to “get back in the game” and its wholesale business hasn’t added any significant accounts since Duncan & Co. took over (and like other wholesale grocers, always remains in jeopardy of a key independent retailer switching suppliers or closing stores)…another baffler from the so-called “Wizards of Wall Street.” After Whole Foods, the best performing supermarket chain in the country over the past two years, posted a profit gain of 7.1 percent, an overall revenue increase of 2.2 percent and a 5.9 percent jump in comp store sales in its fourth quarter ended September 29 (12 weeks vs. 13 weeks last year), it’s performance was heavily criticized by many financial analysts. Apparently those strong numbers weren’t good enough for the armchair money changers who downgraded the stock (creating a sizeable dip in share price) and faulted the Austin, TX natural and organics retailer’s sales and earnings performance. To be fair, WFM did lower its financial guidance for fiscal 2014, but the chain’s numbers continue to be “off the chart” especially when compared to its supermarket peers. Share price, despite the recent tumble, has increased nearly 40 percent this year and in FY 2014 the company plans to open between 32 and 38 new stores. ‘We reported record fourth quarter operating results which contributed to the best fiscal year performance in our company’s 35-year history. For the last four years, we have increased our new store openings while producing improvements in operating margin and higher returns on invested capital, and we expect these trends to continue in fiscal year 2014,” said John Mackey, co-founder and co-chief executive officer of Whole Foods Market. “We are dedicated to providing our communities with fresh, healthy, natural and organic food, and with 94 leases in our development pipeline, we look forward to delivering accelerating new store growth for several years to come.” That statement alone will hopefully allow the financial analysts to gain some perspective. Although I doubt it…at Brussels-based Delhaize Group, the company’s “brand repositioning” efforts at its Food Lion and Hannaford banners appear to be helping sales, but not profit. At its U.S. stores, which also includes Bottom Dollar Foods, total revenue grew 2.2 percent to $4.4 billion and comparable store sales increased 2.2 percent as well in the third quarter. However, underlying profit at its U.S units (not including Sweetbay, Harveys and Reid’s which are in the process of being sold to Bi-Lo Holdings) dipped 20.2 percent to $169 million and operating margins were down a full percentage point to 3.9 percent of sales. Overall, the international retailer said additional price investments helped created a $112 million loss. As I’ve said in the past, Delhaize’s U.S, stores remain in big trouble, especially if even bigger gains aren’t achieved at its Flagship Food Lion banner. We’ll be better able to judge Delhaize’s U.S. performance in mid-2014 when the company cycles new numbers a full year after implementing its “brand repositioning” efforts. On a related note, it didn’t take long for short-term former Delhaize America CEO Roland Smith to find work. Office Depot, which recently acquired rival Office Max, has named the well-traveled Smith as its new chief executive. He replaces co-CEOs Neil Austrian and Ravi Saligram, who will be leaving the Boca Raton, FL based office supply retailer…Giant/Carlisle and Peapod, two operating units of Ahold USA, announced that they have opened a new fulfillment center in Coopersburg, PA that will allow Giant/Carlisle customers in more than 25 ZIP codes in the nearby area to shop online and be serviced with home delivery by Peapod. Customers will also earn Giant gas rewards and A+ School Rewards with their online purchases. The company said by using their Giant BonusCard they can jump start their first shop online from a list of items they have bought at their l
ocal Giant by entering their card number online. Groceries can be delivered as soon as the next day after the order is placed. More Ahold news: the Amsterdam based retailer announced generally flat earnings in its third quarter; net sales, underlying income and operating income were marginally down but not profit rose 17 percent. Identical sales growth was 0.1 percent (0.6 percent excluding gas). The Dutch merchant noted that “our stores maintained stable volumes and had low levels of inflation. In a promotional market, our U.S. operations gained market share. Consumer confidence in the economy remained fragile.” During the quarter, AUSA closed six New Hampshire units. Underlying U.S. profit margin was 4.0 percent compared to 4.1 percent last year. At the end of the third quarter. AUSA operated 772 stores, three fewer t han in the corresponding period in 2012…Fairway Group Holdings (Fairway Markets), which is still in its “honeymoon” period following its April IPO, posted a loss of $12.2 million in its second quarter, ended September 29. That’s a slight improvement from the comparable period last year when the Manhattan-based niche retailer lost $15.9 million. Revenue in the quarter grew 14.1 percent to $183.2 million from $160.5 million benefiting from two store openings – in the Chelsea section of Manhattan and in Nanuet, NY. However comp store sales only grew by 1 percent and the company said that its new 17,000 square foot store in Chelsea unit has gotten off to a slow start and that the store is now being reconfigured to make for a better shopping experience. More New York news: Westside Market NYC, one of Fairway’s prime competitors in Manhattan, announced that it will open its fifth unit next summer and first store on the East Side. The new 19,000 two-level Westside store will be located at the corner of E. 12th Street and Third Avenue. “Since the original Westside Market NYC was opened by my father, John, in 1965, we have worked diligently to provide the best supermarket experience to residents along the West Side of Manhattan,” said George Zoitas, CEO of Westside Market NYC. “After 48 years, four locations, and many people asking when Westside Market NYC would meet the East Side, we felt that the opportunity with 84 Third Avenue was the perfect introduction for our brand to the other side of Manhattan.”… Jim Rogers, veteran president and CEO of the Food Industry Alliance (FIA) of New YorkState, has retired. Rogers did a stellar job of leading the EmpireState’s largest food industry trade group during his 26 years at the helm. Krasdale’s Mitch Klein, who is current FIA chairman, has appointed an eight-member committee that will help conduct a search for Rogers’ successor. Also retiring at the end of last month was Natan Tabak, Wakefern’s senior VP and chief information officer. Tabak, a truly brilliant and funny man, began his career at Wakefern in 1981. At the cooperative wholesaler’s recent annual meeting, Tabak was presented with Wakefern’s Chairman’s Award which recognizes individuals for commitment to innovation, entrepreneurship and above all, cooperation – a value that has long defined the co-op. “I’ve had an incredible career at Wakefern – I have loved every minute of it,” Tabak stated. “My retirement provides me with an opportunity to explore other interests and to spend time with the love of my life, my wife Barri.” In other Wakefern new, the co-op is suing Lexington Insurance Co, a unit of AIG, for breach of contract alleging that the big insurance firm has yet to pay out more than a small portion of losses at its members’ ShopRite stores that were caused by Hurricane Sandy last year. Filed in Superior Court in Middlesex County, NJ, the Keasbey, NJ-based wholesaler is reportedly claiming that Lexington has denied coverage for more than $50 million in losses caused by the devastating storm. Wakefern is also allegedly charging that Lexington failed to respond promptly and meaningfully to its claims and then didn’t investigate them with due diligence. The complaint covers approximately 300 ShopRite and PriceRite stores…a tip of the hat to Wawa CEO Chris Gheysens, who delivered a masterful speech to more than 200 students earlier this month at the Pat McCarthy Lecture Series at Saint Joseph’s University. Not only was Gheysens’ talk detailed and interesting, his humble, self-deprecating style was a big hit with the future food industry executives. Filling retired chief executive Howard Stoeckel’s shoes is indeed a tall order, but I think Wawa got it right when they promoted Gheysens, who I believe is a future superstar in the food industry…several obits of note to report. Passing away late last month was Hal Needham, one of the greatest stuntmen in movie history. During a career that lasted nearly 60 years and featured stunt work on an astounding 4,500 TV shows and 310 movies, Needham claimed to have broken 56 bones. He also helped devise new stunt methods and devices that made his craft slightly less dangerous. Later in his career, he branched out as a director, piloting 20 movies including “Smokey and the Bandit” (1977) and “Cannonball Run” (1982). Needham was 82. Also leaving terra firma last month was Ed Lauter, one of the great movie “that guys” of the past 40 years. Lauter, 74, who appeared in more than 200 film and TV roles, usually played a cop or a bad guy. He described himself as a “turn” actor, someone who shows up at some point in a film and suddenly turns the plot in a different direction. Among his best known and most visible roles were as brutal prison guard Captain Knauer in the original “The Longest Yard” (1974); he also appeared in the 2005 remake); as sleazy gas station attendant Joseph Maloney in Alfred Hitchcock’s last film, “Family Plot” (1976); and as violent cop Richard Shriker who assists vigilante Charles Bronson in “Death Wish 3” (1985). You may not know Lauter by name, but one look at his face in any of his movie roles and you’ll know exactly whom I’m talking about… I was also saddened to hear of the passing of rock & roll legend Lou Reed. Reed, who had had liver transplant in March. He died at age 71 late last month. While Reed’s musical style and voice were often difficult to relate to, he was truly a man devoted to all things rock – from history to innovation. His first album in 1967 as the lead singer of the Andy Warhol inspired band, Velvet Underground (who were inducted into the Rock and Roll Hall of Fame in 1996), was one of the first vinyl discs that I owned and its ferociousness burned an imprint in my mind that I can still remember. Despite heavy drug use and an overall lifestyle that later led to his health issues, Reed was like a misguided missile – moody, unpredictable and powerful – but one who managed to write two of the greatest rock tunes of all time – “Sweet Jane” and “Rock & Roll,” which both appeared on the Velvet Underground’s 1970 album “Loaded.”
