Third Generation Ascends As Ryan Redner Takes Helm
Tough-minded, gritty, tenacious and highly competitive. While the late, great Earl “The Chief” Redner, his son Dick and Dick’s son Ryan clearly have different personalities, they share that same thread on how they approach the business. And now has come the time that Ryan will get his opportunity to continue a great family legacy, assuming the title of president and chief executive of the Reading, PA-based regional chain effective May 1.
The genesis of the Redner’s family success is remarkable in itself when you consider that “The Chief” didn’t really begin his own enterprise until his mid-40’s (having spent nearly 30 years with Grand Union where he became the youngest superintendent in the company’s history). While Earl Redner was an old school leader who breathed the importance of store operations, he was also a visionary, being one of the early pioneers of the supermarket “warehouse” movement. He also cared deeply about the company’s associates, and when the retailer established its employee stock ownership plan (ESOP) in 1975, it became one of the first supermarket organizations to give equity to its employees.
Dick Redner, who will remain chairman of the 64 store regional chain (44 supermarkets and 20 Quick Shoppe c-stores), deserves a lot of credit for taking the retailer to the next level. He ran the company during its greatest period of growth, expanding the company into the Delaware Valley as well as into Maryland and Delaware. He also remained focused on store operations and, under his leadership, Redner’s has grown to a company that now employs more than 4,700 associates/company owners. In addition to his role as chairman, Dick Redner will also assume the title of senior VP of strategic planning and will actively work with the executive staff on key business elements while serving in a consultative role to the CEO.
As for Ryan Redner, he’s ready for the big job. He’s been involved in the family business since he was a kid, having been mentored by two great leaders. After graduating from college in 1999, he joined Redner’s Markets on a full-time basis and has worked in virtually every facet of the business. Over the years, I’ve witnessed his maturity and his improved skill level in communicating with the associates. And as he’s moved up the management ladder, first as a board member in 2004 then as chief operating officer in 2007, I’ve been impressed not only by his leadership abilities but also his tenacity and strong work ethic.
“I felt it was time for the next generation. I and the board have full confidence in Ryan’s ability to provide leadership for our company as we take the next steps into building a strong, third generation of family leadership positions,” said Dick Redner.
I couldn’t agree more.
Ahold Delhaize Comps Dip In U.S.; Earnings Rise, Synergy Savings On Track
In reporting its first quarter 2017 sales and earnings (ended April 2), the newly formed Ahold Delhaize organization continued its recent pattern at the nearly 2,000 U.S. supermarkets it operates of strong earnings and slightly negative comp store sales.
At its 776-store Ahold USA division, the company’s underlying operating margin remained at a healthy 4.2 percent, earning $270.4 million in underlying operating profit. Comp store revenue (ex-gas) dipped to negative 1.8 percent (compared to negative 1.4 percent in the period a year earlier). The company cited continuing deflation, adverse weather and the timing of Easter as contributing factors for the declining comp store performance at its 776 stores. Overall sales at AUSA in the quarter were $6.4 billion.
At Food Lion and Hannaford’s 1,214 stores, underlying operating margin was 3.9 percent and underlying operating income was $166.1 million for the quarter. Comps, which were positive 2 percent in Q1 2016, were flat this period. Overall sales at Delhaize America were $4.2 billion.
Synergy savings-wise, Ahold Delhaize said it is on track to deliver its projected $543 million amount by 2019. In the U.S., the big retailer said $38 million in synergy savings had been delivered during the first quarter.
“We are pleased to report a resilient first quarter performance with an increase in margin for the group despite the ongoing deflationary environment in the United States,” said CEO Dick Boer. “We continue to make significant progress on the implementation of our ‘Better Together’ strategy, investing in our customer proposition, while improving margins.”
In the post-earnings release conference call in Amsterdam, Boer said the company was focusing on improving its center store strategy following improvements of its perishables departments over the past two years as part of its “Operation Thunder” program. “We’re optimizing our product ranges and we look at our space allocation per store to max all their needs and provide a distinct offer for our customers. That’s really working on improving the center store offer for our customers,” Boer told the analysts.
The veteran Ahold executive also addressed the question of the future of bfresh, which since its debut two years ago still has only three stores in operation (although there are four more stores planned), noting that it will decide on a small store rollout strategy later this year. He added that the bfresh model and Hannaford’s new small format (which debuted in N. Berwick, ME in 2015) are right for the market and represent a “nice opportunity for us.”
In assessing the upcoming threat from Lidl’s U.S. debut next month, Boer said that its Food Lion unit is ready for the battle. “We know exactly where they will come,” he said.
Earlier last month, Ahold USA and Delhaize America announced the next wave of management changes affecting its five supermarket divisions (brands) and its commercial services and strategy unit, which is part of its Retail Business Services (RBS) division.
Both Ahold USA and Delhaize America said they are continuing the process of creating brand-centric organizations to ensure they remain customer-focused, close to their communities and are positioned in their local markets.
As noted previously by the newly combined $43 billion U.S. retail juggernaut, each of the brands will have distinctive commercial strategies that are tailored to local markets with dedicated resources, including category merchandising, assortment, pricing, promotions, marketing and format teams. This brand-centric structure is expected to be completed by early 2018.
In addition, RBS, which was created in January 2017, will seek to leverage its scale to drive synergies and best practices as well as provide industry-leading expertise, insights and analytics to the Ahold USA brands and Delhaize America brands to support their respective strategies, including commercial and other support services.
So, here’s the new leadership teams lineup at its core five operating divisions (brands) and at the commercial services and strategy unit:
Tom Lenkevich will continue as president of Giant/Martin’s. Reporting to him will be: John Ponnett Jr., SVP of operations; John Ruane, SVP of merchandising; Matt Simon, VP of marketing; and Manuel Haro, VP of strategy and planning.
At Stop & Shop, based in Quincy, MA, Mark McGowan will continue to serve as president of the division. Reporting to him will be: Mark Messier, EVP of merchandising; Bob Yager, SVP of market operations and sales; Stacy Wiggins, SVP of market operations and sales; and Steven Kienzle, SVP of market operations and sales. The three operations executives will divide store ops responsibilities for the company’s largest sales and geographical brand, a territory that covers New England, New York and New Jersey. Additionally, Sonja Boelhouwer will serve as VP of strategy and planning.
At the Giant/Landover brand, Gordon Reid will continue as president. Reporting to him will be: Ira Kress, SVP of operations; Tonya Herring, SVP of merchandising; John MacDonald, VP of marketing; and Mark Adamcik, VP of strategy and planning.
At Hannaford, Mike Vail remains president. Reporting to him will be: Bob Schools, SVP of operations; Peter Forester, SVP of merchandising; and Malie Buker, VP of marketing.
Meg Ham will continue to lead Food Lion as president. Reporting to her will be: Greg Finchum, EVP of operations; Geoff Waldau, EVP of merchandising; Deborah Sabo, SVP of marketing; and Matt Yates, VP of strategy and planning.
At RBS, which will continue to be headed by Ahold veteran Roger Wheeler, JJ Fleeman continues to serve as EVP of commercial services and strategy. Reporting to Fleeman will be: Dave Bass, SVP of merchandising and marketing services; Juan De Paoli, SVP of private brands; Jeff Dichele, SVP of private brands; Keith Nicks, VP of digital, personalization, loyalty and analytics; Matt Nereim, VP of strategy and PMO; Marissa Nelson, SVP of sustainable retailing; and John McGrath, VP of pharmacy services.
Nick Bertram, currently SVP of merchandising for Ahold USA, has taken on a special assignment leading the integration to stand up the brands. Bertram will work closely with the U.S. brand leadership teams, RBS leadership, and the integration management office to enable the planned launch in early 2018.
Some prominent current executives’ names were not included in the internal announcement including: Raymond McCall, SVP of health and household for Ahold USA; Amy Hahn, SVP of marketing at Ahold USA; and Erik Keptner, SVP of sales, merchandising and marketing for the Giant/Martin’s division. It is not clear whether those executives have been offered other positions that may be announced at a later date, were offered other positions but declined to accept them, or were not offered positions within the new decentralized structure.
The next wave of major personnel announcements is expected in a few months when additional merchandising positions, including category manager, will be offered at the divisional levels. Also to be announced at a later date is the integration of administrative support group personnel that fall under the RBS unit (finance, HR, legal, IT, supply chain and own brands).
‘Round The Trade
Lidl finally announced its store opening plans and, as expected, the German-owned discounter, whose U.S. offices are based in Arlington, VA, will cut the ribbon on 20 stores on the same day – June 15. The opening group of stores will be located in three states – nine in Virginia, nine in North Carolina and two in South Carolina. Those stores will be serviced by newly constructed Lidl distribution centers in Fredericksburg, VA and Mebane, NC. A third Lidl DC in Perryville, MD is currently under construction and will service the company’s stores in Maryland, Delaware, Pennsylvania and New Jersey. Some of those units should debut later this year or in early 2018. Lidl noted that it will have 100 stores open between New Jersey and Atlanta by next summer. It has been a three-year wait for one of the most anticipated debuts in recent retail food history and we will know very soon how much firepower Lidl really has…the recent Jana Partners nearly 9 percent equity stake in Whole Foods has already had an effect on the big organics retailer. On May 10, a month after Jana demanded changes at the sputtering merchant, CEO John Mackey (he ultimately may be one of those changes) blew up the company’s board replacing five directors, naming a new chair person and bringing in a new CFO. The new chairwoman is Gabrielle Sulzberger, wife of New York Times chairman and publisher Arthur Sulzberger. Keith Manbeck is WFM’s new CFO. He comes from Kohl’s and replaces the retiring Glenda Flanagan. On the sales and earnings front, in its recently completed second quarter ended April 9, the recent negative trend continued. Comp store revenue declined 2.8 percent (its seventh consecutive quarter of negative comps) and profits dipped 30.3 percent to $99 million. Mackey announced several new initiatives designed at cutting costs and improving efficiency. Those include a $300 million in cost cutting by 2020 and a centralized merchandising initiative that will be completed by the end of this year. Whole Foods’ affinity loyalty rollout to all of its approximately 465 U.S. stores will also be accelerated…in other earnings news of importance, Amazon once again posted strong numbers in its first quarter which ended March 31. Net income rose 41 percent to $724 million. Worldwide sales increased 23 percent to $35.7 billion and its Amazon Fresh unit continues to grow, now operating in 21 U.S. cities as well as London and Tokyo. At Publix, earnings decreased 4.6 percent to $555.3 million in its first quarter and comp store sales dipped 2.1 percent, its first quarterly sales drop since 2009. Along with the shift of this year’s Easter holiday (second quarter this year, first quarter last year) the employee-owned upscale merchant cited the effects of store cannibalization as a factor in declining same store revenue….potential bad idea of the month: Target will soon begin testing an online delivery service in its core Minneapolis market that will allow shoppers to order online and receive delivery to their homes the next day. The new service, called ReStock, will be rolled out this summer. While I know every retailer needs an upgraded online presence, the idea that Target, despite better than expected first quarter financials, can make this experiment work based on its stumblin’, bumblin’ and fumblin’ execution in grocery at its stores seems highly implausible. And just before presstime, Target agreed to an $18.5 million settlement with 47 states and the District of Columbia over its 2013 data breach in which payment data for more 41 million customers was exposed. Interestingly, consumers will receive no proceeds from the settlement (the states will get the compensation); however, the Minneapolis-based mass merchant is reportedly close to settling a separate $10 million consumer class-action suit related to the breach. Earlier, Target shelled out $39.4 million to banks and credit unions affected by the breach…Bumble Bee Foods, North America’s largest shelf-stable seafood company, has pled guilty to conspiring to fix prices of canned and pouched tuna, the U.S. Justice Department has confirmed. With the guilty plea comes a minimum $25 million fine which could increase up to $81.5 million if Bumble Bee sells the company. The company is currently owned by London-based private equity firm Lion Capital LLP… disappointing news for two struggling regional chains. Southeastern Grocers (Bi-Lo, Winn-Dixie), owned by Dallas-based PE firm Lone Star, will shutter 20 stores in the next 45 days. Six of those units are Bi-Lo stores in North and South Carolina. Lone Star has been trying to find a buyer for its big supermarket asset since 2014. Overall sales last year dipped 7 percent and comp revenue fell 3.6 percent as heightened competition from Publix and Wal-Mart impacted the retailer’s business. At Marsh, the situation is even worse. The Indianapolis-based chain, after years of declining sales and store closures, finally filed for Chapter 11 bankruptcy protection on May 9. The formerly family-owned retailer, which was acquired by PE firm Sun Capital in 2006, warned that it could close its remaining 44 locations if a buyer can’t be found in the next 60 days. Sounds like the fire sale has officially begun…some news from a bit farther south: Wegmans has announced that it will build its first Washington, DC store in the sprawling 10-acre Fannie Mae headquarters complex on tony Wisconsin Avenue NW. The new store will be part of a huge mixed use project that will include other retail, residential and cultural arts facilities. The new Wegmans, which is slated for a 2022 opening, will be 80,000 square feet in size and will prove a huge competitive threat to Safeway/Eastern’s highest volume unit (“Social Safeway”) and two other big revenue producing stores operated by Whole Foods and Giant Food, all located on Wisconsin Avenue. Giant’s sister division, Giant/Martin’s has announced that it will close its nine remaining stores in the Richmond market by August 2. “Throughout this difficult process, our top concern has been to take care of our associates and treat them fairly and with respect,” Giant/Martin’s president Tom Lenkevich said. Those closures include the former Ukrop’s store in Williamsburg (which has a solid chance to be sold after it is shuttered). Another Martin’s store located on Hull Street Road in Richmond, whose lease is expiring, will close on June 30. About a year ago, as part of an FTC divestiture agreement between Ahold Delhaize (AD) and the FTC, Publix agreed to acquire 10 of Martin’s Richmond-area stores. Seven of those units are currently undergoing major renovations and the first few are expected to debut later this summer. The decision to attempt to divest Martin’s stores in the market meant that the newly merged retailer had elected to keep its Food Lion banner operational in the Richmond area. And last month, AD announced that it will bring its “Easy, Fresh & Affordable” refurbishment program to the overall Richmond area where it operates 71 stores in the overall marketplace (approximately 45 of those units are in metro Richmond). However, Food Lion will find the going much more difficult in the capital of the Old Dominion than in its border state to the south. Even with the eventual withdrawal of Martin’s, Food Lion (and every other food retailer) has been adversely impacted by two humongous Wegmans openings during the past year. While the Rochester, NY-based uber-merchant hasn’t cratered the market, when you extract more than $100 million a year from a middle-sized market you’re gonna create a fairly high level of disruption. And when Publix officially enters the market later this year, it won’t take long for them to eclipse the volumes that Martin’s did at those same locations. The Lakeland, FL juggernaut is reportedly spending more than $5 million per store in improvements and you can bet that the morale of the Publix associates will in no way resemble the moribund attitudes that have plagued Martin’s in Richmond for the past four years. However, the biggest threat to Food Lion
– not only in Richmond, but in many areas of the southeast – is the upcoming June 15 debut of Lidl. While the German-based discounter won’t admit it, it seems pretty obvious that Food Lion was right in the crosshairs when Lidl began planning its U.S. entry in 2013. While Kroger may have been the retailer most impacted when Wegmans entered the market (based on compatible operating styles), the Lidl matchup won’t be a good one for Food Lion, which still counts on price, limited perishables and increasing its private label sales as key elements of its success. Lidl’s go-to-market formula prioritizes those same components as well. Lidl has approximately a dozen leases signed in the Richmond area with three stores scheduled to cut their ribbons on opening day. About 40 percent of its new stores could be in direct competition with Food Lion. Gaining market share in Richmond has been a challenge for every retailer over the past three years. In 2016, with the Wegmans entry, the stakes were raised higher. Now with Publix and Lidl about to debut, the pressure to even maintain comp store sales becomes even more daunting. Something’s gotta give.
Local Notes
Never let it be said that New York City Mayor Bill de Blasio wants to be late to any party that involves his aggressive pro-consumer approach (even at the expense of business). While federal legislation involving posting expanded nutritional information in food establishments has been delayed until May 2018, Mayor de Blasio announced that any NYC merchant which operates 15 or more stores nationwide will need to clearly display calorie information for all restaurant-type/prepared foods while also making full nutritional data for all such items available on site. “We can no longer wait for federal action, and urge other cities to follow our lead,” said the ultra-liberal de Blasio in a release. The policy became effective on May 22. Earlier this year, the minimum NYC wage increased to $11 an hour (it will reach $15 an hour in 2019), placing yet another challenging hurdle for food retailers to overcome in the five boroughs…in light of the recent corporate changes at Albertsons’ Boise, ID headquarters (Wayne Denningham adds president title, former chief administrative officer Justin Dye departs) some other key corollary moves were made: former Jewel-Osco division president Mike Withers has been promoted to the role of executive VP-retail operations for the East region. Withers began his career as courtesy clerk at Albertsons in Boise in 1976. Susan Morris, who had supervised the company’s East region, now will head Albertsons’ store operations in its West region as executive VP. Jim Perkins, who has seemingly done almost every job at Albertsons in his distinguished career including heading East and West Coast store ops, remains in his current role as executive VP-special projects. Perkins is working with Dan Croce and his Acme team in Malvern, PA. Just before presstime, Albertsons released its fourth quarter and year-end (February 25) sales and earnings. Fourth quarter ID sales decreased 3.3 percent (3.7 percent at Safeway stores). That’s a sharp drop from the comparable period last year when comps were a positive 4.7 percent (positive 5.8 percent at Safeway). For its full fiscal year, Albertsons posted sales of $59.7 billion, a 1.6 percent gain, but continued to show red ink on the bottom line, posting a net loss of $131 million. Albertsons said it expects to spend approximately $1.4 billion in cap-ex during fiscal ‘18 ….at Weis’ annual shareholders meeting, held April 28 at the company’s Sunbury, PA corporate offices, chairman and CEO Jonathan Weis said that the growing regional chain will focus its budget this year on new stores, remodels, supply chain improvements and continued IT upgrades. “In 2017, we plan to invest $90 million in our growth. Our budget includes 14 remodels, a new unit in Brunswick, MD., two fuel centers and the continued expansion of our distribution center in Milton, PA. We also have seven new stores in the active planning stages and expect most of them to open in 2018.” Weis also discussed the company’s recent acquisition and conversion of 44 stores and its 2016 results. “Last year was one of tremendous growth and opportunity for our company. In 2016, we acquired 44 stores and converted them in just three months’ time, growing our store base by more than 20 percent. As a result of our acquisition, we now operate 204 stores and expanded operations into two new states, adding Delaware and Virginia to our now seven state territory throughout the Mid-Atlantic region.” Weis said the company’s legacy stores continued to perform at a high level in 2016, which was a 53-week year compared to 52-weeks in 2015. Adjusting for the extra week, the family-controlled regional chain saw 2016 sales increase 6.9 percent to $3.1 billion while comparable store revenue increased 2.9 percent. Excluding a one-time gain, the company’s non-GAAP 2016 net income totaled $63.3 million, up 6.7 percent. Weis also noted the company’s comparable store sales had increased eleven consecutive quarters. “We are proud of our team – 23,000 associates strong – who made our success possible,” said Weis. Shortly after the annual meeting, Weis posted its Q1 2018 sales and earnings. As expected, overall revenue jumped 15.4 percent and comps, for the 12th consecutive quarter increased 1.1 percent. However, profit dipped by 41.2 percent to $11.1 million. “Our net income was impacted by the Easter and New Year holiday shift compared to 2016, a mild winter and overall price deflation,” said Weis. “We also continue to make significant investments in our pricing and promotional programs throughout our seven-state marketing area.”…Jeff Martin, executive VP-sales and marketing at Utz Quality Foods, has left the growing Hanover, PA snack food organization after four years. We spoke to Jeff about his departure and he said that the decision was strictly his own. “The timing was right for me to leave Utz,” said the popular industry executive, who joined Utz in 2013 after serving as executive VP-merchandising and marketing at Ahold USA. “I have no other plans at this point – I just want to take some time off and review all of my options. I wish Dylan (Lissette, CEO) all the best. He has put together a really great team.” And that team has recently been reorganized. Joining Utz, which last year added Metropoulos & Co. as minority investor after completing the acquisition of Golden Flake Foods, is Tom Flocco, who will become president and chief operating officer. Flocco has been working with Utz as an advisor since October 2016 and formerly served as CEO of Fortune Brands (now Beam Suntory, an international spirits organization). Jay Thompson is also joining Utz as EVP and CFO. He most recently served as chief financial officer for Armstrong Flooring based in nearby Lancaster, PA. Veteran Utz executive Todd Staub, who was CFO, now becomes executive VP and chief administrative officer. Also joining the company will be Mark Schreiber, who comes aboard as executive VP and chief customer officer. Schreiber is well known in the grocery trade from his nearly 10-year stint at Pepperidge Farm, where he served as senior VP-sales and distribution. On the operations side, veteran Utz executive Tucker Lawrence assumes the role of executive VP and chief production and planning officer. Of course, the primary architect behind these moves, Dylan Lissette, remains chief executive and vice chairman… one of Utz’s retail customers, Karns Quality Foods, the 8-store independent retailer based in Harrisburg, PA, has won Supervalu’s 2016 National Beef Stampede Contest. More than 120 grocers nationwide competed for the award which is aimed at increasing awareness of beef as an essential part of dinner. Karns’ winning campaign featured a program that included advertising; digital and social media promotions; a “win 100 pounds of beef” sweepstakes and recipes. The campaign resulted in an 11 percent increase in sales. A prestigious award deservedly earned by some of the nicest people in the business…several obits to report this month, including movie director Jonathan Demme, whose 43-year film career encompassed music documentaries (Talking Heads, Bruce Springsteen, The Pretenders and Neil Young), screwball comedies (“Married To The Mob,” “Something Wild” and “Melvin and Howard”) and included two of the best movies of the past 30 years (“Philadelphia” and “Silence of the Lambs”). A creative film maker who had a keen sense of the importance of dialogue, Demme was 73 when he passed…another personal favorite who left us earlier this month was Michael Parks, who died at the age of 77. Parks was a rugged and tough character actor who had more than 145 film and TV roles during his 55-year career. He was probably best known for his role as casino owner and drug runner Jean Renault on the TV series “Twin Peaks,” but he enjoyed cult comeback over the past 15 years because of his association with iconic film director Quentin Tarantino. Tarantino cast him in “Kill Bill: Volumes One and Two” and later in the great “Django Unchained.”…another film legend has also passed. Roger Moore, the s
econd best James Bond (after Sean Connery) has moved on to a greater spy mission. All told, the dapper British actor starred as the sexy MI-6 super agent in seven films from 1973 to 1985. Prior to that, he gained attention playing similar roles in the TV series “The Saint” and “The Persuaders.” In 2003, Moore was knighted primarily for his charity work, which mainly focused on his role as a UNICEF goodwill ambassador. During a career that spanned nearly 73 years, Moore, 89, appeared in nearly 100 movie and TV roles…the music world also lost a true talent this month with the death by suicide of Chris Cornell, 52, lead singer in Soundgarden and Audioslave. Cornell, who possessed a powerful voice with an amazing range (think Led Zeppelin’s Robert Plant), becomes yet another performer from the Seattle garage rock scene to have died much too young. Nirvana’s Kurt Cobain committed suicide in 1994; Alice in Chains’ lead singer Layne Staley died from a drug overdose in 2002; and Scott Weiland of Stone Temple Pilots also died of a drug overdose two years ago…I am very sad to report the passing of former major league umpire Steve Palermo, whose baseball career was cut short in 1991 while trying to break up a robbery, has died. Palermo, who was considered one of the best arbiters in the game during his 15 year career, was partially paralyzed after chasing three men who had mugged two employees of the restaurant where he had just finished dining. Palermo chased down the attackers and was shot. Told he would never walk again after the shooting, Palermo’s perseverance and dedicated rehabilitation allowed him, with the aid of a cane, to step to the pitching mound and throw out the first ball at the 1991 World Series at Minneapolis’ Metrodome. Palermo was 67…and during the last month, the industry lost two of its most notable executives: Charles Mallowe and Manda Johns. Charlie Mallowe, 72, spent his entire career at Saint Joseph’s University in Philadelphia. He graduated from that great Jesuit school in 1966 and a few years later became a cornerstone in creating the university’s Academy of Food Marketing, which today is the largest academic institution and training ground for educating future grocery industry leaders in the country. He remained at that post for 41 years, retiring in 2009. A tip of the glass to you, my friend! Also leaving us much too young was Manda Johns, senior VP merchandising for Supervalu’s Eastern region. Descriptions like bright, perky, hard-working and a great team player only provide a basic overview of the talent and attitude that Manda brought to those she worked with. She began her career at Safeway in Denver, than became VP-bakery and deli for Giant/Landover, before joining Supervalu in 2004. In 2015 she was promoted to senior VP. She was only 46 when she passed. She will be greatly missed.
