Supermarket chain Albertsons Companies has postponed its planned initial public offering (IPO) which industry observers had expected to be launched about October 15. However, reports say that the company still intends to go forward with its IPO plans, and hopes to launch its publicly-traded debut by Thanksgiving.
News that the Boise, ID based retailer would delay its plan to sell stock came shortly after shares of Wal-Mart and other retailers lost value following a particularly gloomy sales and earnings forecast by Wal-Mart. After the news about the IPO launch delay leaked, an Albertsons spokesperson confirmed that the company would postpone its IPO indefinitely due to “market volatility” but did not say how long the delay would be.
Albertsons, based in Boise, ID, said in an updated prospectus earlier this month, it intends to offer 65.3 million shares priced at $23 to $26 a share, with the possibility of selling an additional 9.8 million shares if there is strong demand, according to the prospectus. If all 75.1 million shares were sold at the top of the range, the value of the deal would be $1.95 billion.
Also noted in the prospectus, was the news that none of its existing shareholders, including principal equity partner Cerberus Capital Management, would sell any of their holdings. Those entities would continue to control about 80 percent of the shares of the new publicly-traded company.
Albertsons also released its first quarter earnings for the period ended last month. The retailer reported a net loss of $109 million, with adjusted EBITDA up 15.8 percent to $704 million total sales increased 2.3 percent to $17.6 billion and identical-store sales rose by 4.3 percent.
At its legacy Albertsons stores, ID revenue increased 2.1 percent, compared with 3.1 percent in the fourth quarter. Identical store sales at other stores with the Albertsons banner were up 9.5 percent, compared with 8.5 percent in the fourth quarter; ID’s at Acme, Jewel-Osco, Shaw’s and Star Market rose 4.1 percent, compared with 3.6 percent in the previous  quarter; and ID’s at Safeway grew 3.8 percent, compared with 3.5 percent in the fourth quarter.
If IPO proceeds are significantly lower than the original target range that would mean less for Albertsons to use for store renovations and other investments in technology and pricing. Sources said that Albertsons could consider downsizing the size of the deal from a planned 16 percent of the shares outstanding to something smaller. Â Some industry observers expect Albertsons to release updated financial in advance of the delayed IPO in an effort to assure investors about its financial health.
Cerberus and its partners have been building the grocery chain through a series of deals since 2006, including its merger earlier this year with Safeway, which made it the second largest conventional grocery in the country after Kroger, with sales of $58 billion at its 2,200 stores throughout the U.S.
In related Albertsons news, Joe Kelley has been named VP-marketing and merchandising for the Shaw’s and Star Markets division of Albertsons. In his new post, he will lead the retailer’s merchandising and marketing efforts covering the approximately 155 stores the company operates in the New England market under the Shaw’s and Star banners.
Kelley replaces Paul Gossett, the Albertsons veteran who has been reassigned to head the company’s merchandising and marketing efforts for its Texas stores.
Most recently, Kelley held the position of president of Stop & Shop of New England. He joined that division of Ahold USA in May 2012. He resigned the post in March of 2015.
Kelley, who grew up in Massachusetts and knows the New England market well, has more than 25 years of retail experience. Before joining Stop & Shop, he was the chairman, president and chief executive officer of Marsh Supermarkets. Prior to working at Marsh, Kelley was the executive VP for Price Chopper which he joined in 2005 as the VP-sales, merchandising and marketing, and was promoted four times there over five years. Kelley has also held leadership roles at Bozzuto’s, Adams Hometown Markets in Connecticut, A&P and Purity Supreme.
