Albertsons Companies announced April 19 that Wayne Denningham, currently the company’s EVP and chief operating officer, has been appointed to the new role of president and chief operating officer.
The announcement came several days after Justin Dye resigned from the Boise, ID-based supermarket chain as its chief administrative officer.
Bob Miller, one of the grocery industry’s most talented executives, remains chairman and CEO, a role he has held since April 2015. He will add some of Dye’s previous duties, including real estate, IT, corporate development and mergers & acquisitions and supply chain.
Several sources said they do not Albertsons to name a new chief administrative officer. The former Cerberus Capital Management (the company’s primary owner) executive joined Albertsons in 2006 and had held a series of key roles at the company including spearheading the chain’s multiple acquisitions over the past decade. Trade observers had viewed Dye as a potential successor to Miller as chief executive.
With Dye’s departure, the company now has two other key “chiefs” leading Albertsons. Shane Sampson remains chief marketing and merchandising officer and Bob Dimond is currently chief financial officer.
Denningham, who was named COO of Albertsons in 2015, will continue to lead store operations with added oversight of marketing and merchandising, supply chain, manufacturing and integration, all of which will continue under their current leadership.
“This is the strongest leadership team I’ve worked with in my 50+ years in this industry,” said Miller. “I asked Wayne to join Albertsons LLC in 2006 to lead our Rocky Mountain division. Since that time, he’s led three different divisions, helped to negotiate and manage some of our most significant acquisitions, and successfully turned around some of our toughest assets. He’s a remarkable leader with tremendous grocery retail acumen, and I’m pleased that he’s accepted this new role.”
Denningham began his career with Albertsons, Inc. in 1977 as a clerk and worked his way up in the organization, serving in district manager roles in three different divisions before being named division president, first of the Rocky Mountain division and later the Florida division. Subsequently, he was promoted to regional president for five divisions of Albertsons, and then served as both executive vice president of marketing and merchandising and executive vice president of operations for the company before leaving in 2004. He joined Albertsons LLC in 2006 and served as division president of the Rocky Mountain, Florida and Southern divisions over the next seven years. In March 2013, Denningham was named division president of the Southern California division following Albertsons’ acquisition of 877 stores from Supervalu, and in January 2015, he assumed the role of south region chief operating officer following the merger with Safeway. Denningham is based at the company’s Boise corporate campus.
Story Update: 4/28/2017
On April 24, Albertsons also announced that current Jewel Osco Division President Mike Withers has been appointed executive vice president of retail operations for Albertsons Companies. Withers will lead the company’s East Region operations, while current EVP of retail operations Susan Morris will lead the West Region. Jim Perkins, EVP of retail operations special projects, is focused on targeted initiatives to accelerate growth. All three executives will continue to report to Denningham.
“Mike is an exceptional leader who understands our business and market areas from coast to coast,” said Denningham of Albertsons Companies. “Throughout his career, Mike has worked closely with many members of our current leadership team, and his management experience and operations expertise will help all of our divisions run really great stores.”
Withers began his career with Albertsons in 1976 in Boise. Like many of the company’s executives, he started as a courtesy clerk and gradually worked his way up until he was running his own store. He served as district manager in both Washington and Florida and was eventually promoted to Big Sky Division president with responsibilities for store operations in Montana and North Dakota, a role he also held in both the Florida and Portland divisions. Since 2006, Withers has served as vice president of marketing and merchandising for the Florida and Southern divisions, and president of the Southern and Jewel Osco divisions.
Withers will office at the company’s Boise, Idaho corporate campus.
In another personnel move announced on April 26, Geoff White has been appointed to the new position of president of the company’s Own Brands organization. In this new role, White will lead the Own Brands team, including the culinary kitchen and technical center. He will be responsible for furthering the growth, development, and innovation of the company’s Own Brands products, including O Organics, Lucerne, Open Nature and the extensive line of Signature products.
“Geoff is a visionary merchant who understands the evolution of our company’s Own Brands and the significant role they play in our overall strategy,” said Shane Sampson, executive vice president and chief marketing and merchandising officer. “Our Own Brand items are integral to how we earn customer loyalty. We’ve developed a nimble process that responds quickly to consumer trends with popular products over the last two years, and I’m excited to see how our team and brands further their development under Geoff’s leadership.”
White started as a general clerk in Burnaby, British Columbia in 1981 and held positions of increasing responsibility over the next 17 years, culminating in being named director of Canadian produce operations, where he was responsible for all produce sales, marketing, and merchandising, spanning western Canada with 210 stores. In December 2004, White was named to a group director position at the Safeway corporate office and was eventually promoted to vice president of produce. In 2010 he was named senior vice president, and over the next five years led several functions including dairy, frozen, deli/foodservice, branded concepts, produce and floral. In 2015, he was named the SVP of marketing and merchandising for the Northern California Division.
White will be located at the company’s Pleasanton, CA campus.
In related news, Cerberus Capital Management, which controls both Albertsons and Supervalu, as part of the phasing out of the Transitional Service Agreement (TSA), originally signed in 2013, is exercising its right to take full control of its large, mechanized distribution center in Denver, PA effective October 2018.
Albertsons acquired that facility in 2013, but as part of the TSA, Supervalu managed the day-to-day functions at the multi-million square foot facility which services both Acme’s 178 stores in the Mid-Atlantic and Supervalu’s independent retailers in Pennsylvania, New Jersey and New York, including Redner’s, Karns, McCaffrey’s, Murphy’s and Western Beef.
Albertsons plans to utilize the Denver facility to supply primarily its Acme stores.
In a memo sent to Supervalu’s retail customers affected by the change, the wholesaler said the company is exploring other options for supplying their stores, including utilizing a depot in Harrisburg, PA (believed to be the old Super Rite distribution center). The memo said: “In looking at and planning for the distribution needs of our East Region customers, we continually explore a range of possibilities focused on building our logistics capabilities for the future so that we can best serve our customers. In doing this review, we made the decision to purchase a distribution center in Harrisburg, Pennsylvania. This was a strategic decision based on the company’s review of its distribution network. The warehouse provides a good central location to this region and our customers.
“At this time, plans are to use the facility to assist in the transition we will need to make regarding our service from the Lancaster distribution center. As you may know, Supervalu and Albertsons share the Lancaster DC, which is owned by NAI/Albertsons and operated by Supervalu. NAI/Albertsons has given Supervalu notice that the agreement to operate this facility will end in October 2018. Therefore, we must look at how to best provide wholesale distribution services to our Supervalu customers who are supplied out of the Lancaster DC.
“We anticipate beginning some work at the Harrisburg DC later this year to begin preparing it for Supervalu distribution capabilities. Supervalu will have discussions with NAI/Albertsons on the specific transition timeline for the Supervalu work at the Lancaster DC. As we determine this transition timeline and how we will use the new Harrisburg facility and any impact it might have on logistics for your stores, we will communicate at that time.”
Additionally, Supervalu on April 25 released its fourth quarter 2017 fiscal results, showing net earnings of $6 million, or $0.02 per diluted share, on consolidated net sales of $2.91 billion, which included $32 million in after-tax charges and costs related to an asset impairment charge, unamortized financing cost charges and a pension settlement charge.
When adjusted for these items, fourth quarter fiscal 2017 net earnings from continuing operations were $38 million, or $0.13 per diluted share.
Net earnings from continuing operations for last year’s fourth quarter were $30 million, or $0.10 per diluted share, which included $9 million in after-tax charges and costs related to debt refinancing charges and store closure charges and costs. When adjusted for these items, fourth quarter fiscal 2016 net earnings from continuing operations were $39 million, or $0.14 per diluted share.
Fourth quarter net sales were $2.91 billion compared to $2.89 billion last year, an increase of $16 million or 0.6 percent. Total net sales within the wholesale segment increased 3.0 percent. Retail identical store sales were negative 5.8 percent. Fees earned under services agreements in the fourth quarter were $42 million compared to $44 million last year.
Gross profit for the fourth quarter was $435 million, or 15.0 percent of net sales. Last year’s fourth quarter gross profit was $431 million, or 14.9 percent of net sales. The gross profit rate increase compared to last year is primarily driven by higher gross margins and vendor allowances as well as lower inventory shrink costs.
“We finished fiscal 2017 with momentum in our wholesale business and an improved balance sheet resulting from the sale of Save-A-Lot,” said president and CEO Mark Gross.
“I’m very excited about our agreement to acquire Unified Grocers as it brings together two great companies to create one of the nation’s leading grocery wholesale organizations. At the same time, we are working to fundamentally improve the shopping experience in our retail stores and with new leadership and renewed passion we are focused on changing our operating results. I remain optimistic for growth and believe strongly in the path our team is pursuing to achieve it.”
Relatedly, sources have told us that Supervalu’s 40-store Farm Fresh division, which in June will be shifting primary merchandising responsibilities to its sister supermarket organization, Shoppers Food & Pharmacy, is up for sale. Sources have told us that a prospectus has been issued and the company is interested in lining up bidders.
And just before we went to press, multiple sources noted that Supervalu is also looking to sell the 22 Food Lion stores it acquired in mid-2016 as part the Ahold Delhaize FTC mandated divestiture process which preceded the merger of the two large chains. Those stores, which have been performing poorly, currently trade under the Shop ‘n Save banner and are located in Central Pennsylvania, Western Maryland and West Virginia.
