Taking Stock

Key Food Rocks The House At Vendor Meeting As Membership Base, Revenue Continue To Grow

Buoyed by another strong year of member growth, Key Food Stores, the Staten Island, NY-based retail cooperative, posted stellar sales and earnings in fiscal 2017. Based on what executives Dean Janeway, CEO, and George Knobloch, COO, told more than 950 sales reps, brokers and distributors (a record crowd) at the company’s annual vendor meeting (aptly titled “Out in the Streets”), 2018 is shaping up to be another strong year. The meeting was held earlier this month on Staten Island at the Hilton Garden Inn.

Knobloch provided an overview of Key’s progress since the last vendor meeting which was held in October 2017 and challenged the audience to “think different” throughout the entire meeting. Currently, Key Food consists of 265 stores in the metro New York market (Tri-State area) which are operated by 128 different members. Annual retail sales are estimated at $2.7 billion ($1.3 billion in wholesale revenue). Knobloch told the audience that not only is Key Food the fastest growing food retailer in New York City and the Northeast, but also in the U.S. The co-op’s stores now command a 25 percent share of the NYC grocery market. Projections are high as the growth continues and 400 stores with $4 billion in retail sales are in sight.

And it’s not just the top line that’s been impressive; operating profit grew 18.8 percent during fiscal ’17 (ended April 29, 2017) and is projected to increase nearly 9 percent this year, marking a 225 percent operating net increase over the past decade.

Janeway detailed Key Food’s retail growth by illustrating (with a slide) that the co-op’s sales by percentage gain has not only been number one in its core Metro NY market, but also on top of the leaderboard in the entire U.S. for the past four years. The company is predicting a 20 percent retail sales gain for fiscal 2018 which ends on April 28. And over a 10-year period, Janeway

noted, Key Food has added 168 net new stores. Janeway told me after the meeting that he was particularly encouraged by recent member gains over the past few months which have included about 15 new stores from the Aurora and Tavera independent groups.

The 49-year old chief executive, who has spent his entire career in the grocery business, believes there is still significant opportunity to grow. He estimated that there are approximately 745 independent stores in the five-borough market that are not Key Food members. Janeway hopes to double the co-op’s market share over the next five years by continuing to unite independent supermarkets in the largest market in the U.S.

Supporting some of Janeway’s predictions was Piyush Chaudhari, president of the Americas for IRI, the large data syndicator. Approximately two years ago, IRI and Key Food began work on providing data and analytics specifically for the “five borough” New York City market, and over the past year that data has been available for both Key Food and the vendor community to utilize.

The power of the five boroughs is enormous. Nearly 8.5 million people live in the area and, if viewed as separate markets, Brooklyn, Queens, Manhattan and the Bronx, would respectively rank third, fourth, sixth and ninth nationally in population. Chaudhari noted significant differences in buying patterns between the five-boroughs and the rest of the New York metropolitan area.

Items like sugar, whipped toppings, baby formula, diapers, mayonnaise and margarine are much more likely to be consumed in the New York City than in the adjacent counties that comprise the rest of the metro NY market.

The uniqueness and market power of the five boroughs is something that both Janeway and Knobloch have featured in their presentations at previous vendor meetings. This year, with the new IRI data to substantiate their claims, both executives believe their support from the supplier and broker community will expand, too. Knobloch took the stage again and reinforced the importance of the four “Ps” – promotion, product, place and price – to drive same store sales. He utilized a series of slides featuring specific categories such as cola, ice cream, mayonnaise and cooking oil to illustrate how proper promotion can create significant sales lift. Knobloch then touted Key Food’s elite vendor program, explaining that those 37 vendors who have joined experienced $450 million in sales, increased distribution and the ability to customize a distribution plan by individual store. He also offered suppliers an opportunity to lower costs and increase their efficiencies by participating in Key Food’s direct shipment program.

Over the past year, Key Food has restructured its in-store execution (ISE) program. The new initiative, led by industry veteran George Harris, features more focused geographical alignment, better training and improved communications.

And as he has done in previous meetings, Knobloch praised (by company name) those vendors who have performed well over the past year and also singled out those suppliers who need to “pick it up” if they want to keep pace with the co-op’s fast-moving expansion plans.

Michele Gissi, Key Food’s talented integrated marketing and public relations leader, focused on three priorities: co-marketing, looking ahead and ways to partner. One of the Key Food’s goals is to promote greater brand awareness through improved and diversified communications which will also help drive brand value. She asserted that Key Food needs to develop content that resonates with the consumer while also seeking bigger basket sizes both in-store and online. Moving forward, Gissi said that her company is also developing more customized content, offering more digital coupons and providing its customers with more exclusive offers. From the vendors, Gissi is seeking to customize national programs for the co-op’s members and to discover and test new programs and items that are offered.

As the meeting entered its final phase, Knobloch emphasized the importance of the retail co-op’s major initiatives – e-commerce, its Urban Meadow store brand conversion and its ongoing effort to integrate its enterprise resource planning (ERP) and its customer relationship management (CRM) platforms.

Knobloch detailed Key Food’s current relationship with grocery delivery firm Instacart which it has partnered with since 2014. Accessed through the company’s websites (most notably keyfood.com) there are currently three fulfillment models that are offered to give their members maximum flexibility while getting their stores online – click & collect, delivery only and full-service – with nearly 75,000 items being available online.

The former Wrigley executive was particularly excited about the future of Key Food’s new Urban Meadow own brand performance. At the last vendor meeting 15 months ago, the new private brands plan was first revealed. Today, the Urban Meadow label has gained traction with 900 SKUs in 68 categories being available. By June, Key Food hopes to have 75 percent of the program converted and will support the brand with a consumer awareness program the following month. As a subset, the co-op has developed an Urban Meadow “Green” line featuring natural and organic products with more than 80 SKUs that is currently being introduced.

In trying to integrate its ERP and CRM systems, Key Food has had to deal with many of the same challenges other retail-driven organizations face when trying to upgrade their internal data systems. Knobloch admitted the company’s current systems are antiquated and inefficient and the co-op is currently beginning to gather information on how to create improved data accuracy through a single source, achieve greater flexibility, agility and speed and seek a more automated solution.

In closing, Knobloch addressed Key Food’s customer trip (Germany – April 17-26); its affiliation with the Los Rancheros Unidos Foundation (reception to be held on May 4); the upcoming “friends of the Food Industry” dinner (May 21 – Knobloch will be honored); the co-op’s two food shows (February 28 and August 22); its annual golf outing (July 9); and its new affiliation with the Academy of Food Marketing at Saint Joseph’s University in which Key Food is offering summer internships and co-op program job opportunities.

Many vendors were overhead saying this meeting was “more like a concert” – lights, confetti, favors, and awesome videos to pump the crowd up and leave everyone inspired to “think different” – about Key Food, about this marketplace, and about their business. Vendors were challenged when resourcing Key Food to bring their best to the table at all times – in terms of funding, as well as intellectual capacity and talent.

As one vendor told us as he was leaving the meeting: “This was the best vendor meeting they’ve had so far. All the presentations were laser focused, they got us in and out in under two hours and, of course, they have a very compelling story to tell us in terms of increased growth and their ability to move boxes for us.”

A Tale Of Two Retailers: Albertsons, Tops Heading In Opposite Directions

Fear and loathing in the grocery business in the U.S. Never in my 45 years as a reporter have I seen the levels of uncertainty and competition intersect to the degree we’re currently witnessing. Based on the events of the past 18 months coupled with the fragile psyches of many retailers, things are going to get worse or more uncertain in the near future.

I’ve written a lot lately about how challenging it’s been for those retailers that for years have not offered their customers clearly defined points of difference. The survival rate in the “mushy middle” has diminished greatly and in the past week, one such struggling retailer – Tops Markets – waved the bankruptcy banner as it seeks to reorganize.

It’s true that Tops’ management, which acquired the regional chain from PE firm Morgan Stanley Private Equity for a discount, inherited the tremendous debt that Morgan Stanley created when it acquired the Buffalo-area retailer from Ahold USA in 2007. But Tops’ problems aren’t going to go away even after it receives financial relief. The company has good locations, but much like many other conventional supermarket chains, its physical store base needs refreshing, it’s behind the curve with its perishables offerings and its digital/ecommerce efforts are below average. Throw in a significantly underfunded Teamsters pension plan (inherited from Tops’ 2010 acquisition of Penn Traffic), shrinking population in the region and some fierce discount competition from Walmart and Aldi, one has to wonder – where do the future “wins” for Tops lie?

Tops isn’t the only regional chain whose future looks foggy. We’ve also written about the financial woes of Southeastern Grocers (which has some significant loan obligations to deal with in the next month). According to Bloomberg, Chapter 11 is a possibility as is the consideration to close as many as 200 stores. Much like Tops, the company’s Bi-Lo and Winn-Dixie stores are smaller and older and offer less differentiation than most of its competitors in Florida and the Carolinas. And comparatively, just as Morgan Stanley didn’t have a clue about operating grocery stores and even did a bad job in its supposed strong suite – financial management – SEG’s parent, Lone Star Funds, has proven even more inept for a longer period at operating grocery stores. If SEG does file for bankruptcy, it will mark the third time in Lone Star’s 13-year tenure as a food retailing entity. Pitiful!

On the other side of the mountain lies Albertsons, which I believe really helped itself with the acquisition of about 2,500 Rite Aid stores. It wasn’t so long ago that the large Boise, ID-based chain was also in the same “mushy middle” puddle that Tops, SEG and other retailers now occupy. Sure, they were much bigger and had the clout of a successful and powerful PE firm – Cerberus Capital Management – to support them. But in reality, Albertsons operated about 2,300 conventional supermarkets that lacked pizzazz. It had tried to go public in 2015 and ultimately decided not to move forward with an IPO effort. Sales declined, too, and as large as the organization was, it also lagged in e-commerce and overall innovation.

However, things began to change about a year ago when the merchant directed significant focus and capital on its digital space and technology. Late last year, Albertsons acquired meal-kit provider Plated to create an offset space for it to explore and potentially grow.

And now comes the move to acquire the third largest U.S. drug chain which sold about 1,900 of its stores to Walgreens earlier last year. This deal checks a lot of boxes for Albertsons and Cerberus (which now can exit from its 12-year ownership of the company).

With an acquisition of this size, Albertsons can now be a substantial player in the drug chain derby by expanding its free-standing Jewel-Osco banner into other parts of the country (particularly on the East and West Coasts) and by utilizing the Rite Aid brand for its in-store pharmacies and HBC/GM private label.

Additionally, this is the best option that Cerberus had to exit ownership and allow Albertsons to gain publicly-traded status automatically since Rite Aid is already on the New York Stock Exchange. And for many of the Albertsons leaders who took a flyer and joined company in 2013 when it acquired many of Supervalu’s struggling retail assets, their faith and loyalty will be rewarded.

It’s a great strategic deal for Bob Miller, the old warhorse who has the unique skill of understanding the intangible dynamics that make companies work while also having gained savvy and skill as a dealmaker over the last 20 years.

And while Wall Street has questioned whether Miller’s age, 74, would prove to be detrimental as Albertsons plays catch-up in the strange new world of retailing, his tailor-made successor John Standley is not only one of the smartest people in the food and drug industry, he’s someone who Miller has known and trusted for more than 20 years. Don’t ever bet against Bob Miller.

Amazon.com Continues To Dazzle With Spectacular Sales, Earnings In 4th Quarter

Sixty billion, five-hundred million dollars in revenue. In one quarter!

Sure, Amazon.com might get virtually every benefit of any doubt when it comes to its sales-to-earnings ratios, but the Seattle-based juggernaut also turned in a phenomenal profit performance for the three-month period ended 12/31/17. Earnings jumped 69 percent to $2.1 billion compared to last year’s fourth quarter.

Much of the growth came from two sources: the exploding sales of its Alexa cloud-based voice service/intelligent assistant and a huge increase in the number of new enrollees to its upgraded Prime subscription service.

“Our 2017 projections for Alexa were very optimistic and we far exceeded them. We don’t see positive surprises of this magnitude very often – expect us to double down,” said Jeff Bezos, founder and CEO of the company. “We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smarthome device from 1,200 unique brands with Alexa and we’re seeing strong response to our new far-field voice kit for manufacturers. Much more to come and a huge thank you to our customers and partners.”

As for the rapid growth of Prime subscriptions, Amazon said 2017 was its best year ever. Revenue from all of the company’s fee-based services which includes annual and monthly Prime fees, plus other revenue from books, music, videos, games, and non-Amazon Web Services subscriptions rose to $3.2 billion, up 47 percent from a year earlier. According to research firm Consumer Intelligence Partners, Prime is key to Amazon’s success because, well, Prime members spend more. As of September 30, 2017, the average Amazon Prime member spent $1,300 a year on Amazon compared to $1,000 for all other U.S. Amazon customers.

Brian Olsavsky, Amazon.com’s CFO, told analysts following the earnings release that the company is pleased with the performance of newly acquired Whole Foods Market thus far, despite a small operating loss in the quarter. Olsavsky added that Amazon’s physical store sales (of which WFM is the dominant contributor) were $4.5 billion. “That was slightly better than what was built into our guidance. At the time of the acquisition, we had stepped up the fair market value of certain assets on the balance sheet. That is going to increase the amortization. So far, our focus has been on continuing to lower prices even beyond the initial ones that we discussed at the close of the deal in late August,” he said, referencing price cuts on items including salmon and cage-free eggs. “We’ve launched Whole Foods products on our Amazon website and the technical work continues to make Prime the Whole Foods customer rewards program, and we expect to have more on that later in the year. We’ve also added lockers, and (with) much more to come. So, we’re very happy with the initial results out of the team in Whole Foods down in Austin.”

And as seems to be the case, the company that’s been called the world’s most influential organization, plans several new initiatives the next few months. Included in its new stuff is the expansion of its cashier-less Amazon Go convenience stores, the first of which debuted late last year in Seattle. According to published reports, Amazon will open six more “Go” units this year and could add stores in cities other than its home base. Additionally, according to The Wall Street Journal, Amazon is preparing to unveil a new delivery service, Shipping With Amazon, that will compete directly with FedEx and UPS in an attempt to move into the enormous freight and parcel delivery business. The first test is expected to be launched in Los Angeles in the next few weeks. Also on the Amazon slate was the official announcement that Amazon will merge its “Fresh” division with its “Prime Now” unit. Both subsidiaries offer grocery delivery service. Fresh provides a wide selection of groceries for a monthly charge of $14.99 in addition to the annual $99 Prime subscription fee. Prime Now offers a smaller selection of groceries that are delivered within two hours for no fee (if you already have a Prime membership). The integration should be complete by year’s end. Look for most of the components of “Prime Now” to be utilized in the new Amazon grocery model. And it’s important to note that Prime Now will be the service that Amazon will deploy for its two-hour delivery to Whole Foods stores for Prime members only. The first phase of the WFM/Prime Now delivery initiative began on February 8 in Austin, Cincinnati, Dallas and Virginia Beach. Amazon plans to offer its new delivery service at all 460 Whole Foods stores by the end of 2018. It noted that there’ll be no extra charge for orders above $35, but customers who choose one-hour deliveries will be charged $8. And just before presstime we learned that holders of Amazon Rewards Visa credit cards will get 5 percent cash back (for Prime members) on purchases made at Whole Foods Stores (3 percent for non-Prime members).

The efficiencies that were envisioned in the Amazon-WFM deal are quickly becoming visceral. However, while it’s clear that Whole Foods provides a tremendous laboratory for future growth in the bricks and mortar silo, there are certainly growing pains that have become obvious. The retailer’s move to a more centralized merchandising structure (a project that began prior to Amazon’s acquisition last June) will almost certainly rob some of its local nuance and decision-making. And its recently installed order-to-shelf (OTS) inventory management system, aimed at making store productivity more efficient, has led to a huge negative social media outcry from Whole Foods associates who claim the OTS system is too complex and stressful and has led to dozens of resignations.

This may seem like a minor distraction in the vast Amazon universe especially since its physical store presence is so small. But we expect further bricks and mortar acquisitions in the next 18 months – BJ’s, Target? – and those cultural issues will become more important.

As more process is installed to gain better organizational control, the culture almost always suffers. There’s a narrow intangible balance between systems and employee morale which was clear a positive differentiator with the “old” Whole Foods.

Amazon.com has never been in a business as labor intensive as running physical retail stores. Let’s hope they don’t mistake backroom efficiency for humanity.

‘Round The Trade

I think we all know that there’s tremendous waste in our food assistance program and the last three presidential administrations have all trimmed the subsidies available to those economically unable to afford food. Fighting hunger remains one of our nation’s biggest challenges and President Trump’s proposed $17.2 billion cutback of SNAP benefits for 2019 represents a 22 percent reduction from last year’s budget allocation. The reduction, which is actually $200 million over 10 years, is not only cruel, it’s ridiculous to boot. Trump and his bobblehead buddy “Slip Him a Mickey” Mulvaney, the director of the Office of Management and Budget, have concocted a plan that would offer SNAP qualifiers a meal-kit of products that would be delivered directly to the homes of those who are eligible for food assistance. The program, called U.S. Harvest Boxes, would provide shelf-stable milk, juice, cereal, pasta, peanut butter, canned meat, canned fruit and canned vegetables which would all be American-grown and produced. Politically speaking, this is a presidential administration that can barely walk a straight line on any initiative. Politics aside, does anybody think a project as labor intensive and nuanced as this has any chance of being executed at a competent level? Sadly, this could be “I Love Lucy” meets “Monty Python”…multiple sources are telling us that an announcement is imminent about the status of Supervalu’s Farm Fresh corporate store division based in Virginia Beach. Last year, the company issued a prospectus offering the unit’s 40 stores for potential sale. We’re hearing that Kroger/Harris Teeter will be one of the active players. On a larger scale, Supervalu is once again facing pressure from activist shareholder Blackwells Capital LLC to separate its wholesale and retail divisions. The Manhattan-based investment management firm, which owns 4.35 percent of SVU stock, pushed the Eden Prairie, MN wholesaler/retailer in October to sell one-third of its grocery stores, parts of its real estate and bring in new leadership. Blackwells also wants to choose three directors of its own to force these changes in an attempt to gain shareholder support. It criticized most of the existing nine directors as having no direct retail operational experience, adding that the last three board chairmen have had no wholesale or retail food industry experience. The wholesale business, which provides about three-fourths of Supervalu’s revenue and nearly all of its operating profit, should be shopped to potential buyers, such as SpartanNash Co., UNFI or C&S, Blackwells said. Supervalu quickly countered Blackwells’ request noting that a “rapid transformation” is under way. The company also noted that its has added new wholesale customers including The Fresh Market and America’s Food Basket and has acquired wholesale grocers Unified and Associated Grocers in the past 12 months. SVU has also added new leadership in its wholesale and retail divisions. As a shareholder, Blackwells has a right to be disappointed. But clearly, they have no feel for the realities that face a company that’s still climbing out of a black hole created by inept former CEOs Jeff Noddle and Craig “Clueless” Herkert. Furthermore, the company’s last three chairman were Wayne Sales, Bob Miller and currently Gerald Storch. While it’s true that Sales and Storch do not have food industry backgrounds, to assail current Albertsons chairman and CEO Bob Miller as inexperienced is an insult to him and a clear indication of how big a money grab this forced march is. I’ve said it before: Supervalu chief executive Mark Gross is doing a very good job; give him a bit more time to clean up the problems of SVU’s corporate retail stores. Many if not all of those banners are going to disappear through sale or closures, but the climate is not currently favorable to potentially dispatch about 220 stores, many of which are simply undesirable…Peapod, the grocery delivery service unit of Ahold Delhaize USA, has opened a “wareroom” in North Coventry, PA in conjunction with its Giant/Martin’s banner that will allow it to serve 25 percent more customers in the Philadelphia area. This is the fourth Peapod “wareroom” to open in Pennsylvania and will bring an additional 120 jobs to the area…it appears that Boxed.com, the online retailer that resembles a digital version of Costco, will be the next e-commerce firm that will be sold. The four-year-old Manhattan-based startup has reportedly spurned an acquisition offer from Kroger and, according to multiple reports, is talking with Amazon.com about a deal. Boxed.com’s attractiveness lies in the unique space it has created. It offers businesses and consumers club store type products with free two-day delivery on purchases of more than $49. There is also no membership fee. A one percent cash reward is also offered on the total price of every purchase…Weis Markets has upgraded its “Preferred Shopper” program, making it easier to qualify for discounts and adding a 10 percent discount on Weis private label items every Tuesday for seniors 60 years and older. “Our upgraded rewards program now offers more of our customers reward discounts on some of our best-selling products and is particularly helpful to those in areas with limited gas reward options,” said Ron Bonacci, VP-marketing and advertising for the Sunbury, PA regional chain. “Our rewards program has always been a tremendous success but many of our customers wanted the additional option of saving on the products they regularly purchase. Ultimately, we wanted to give them more flexibility in their reward choices”few thoughts about last month’s FMI Midwinter confab in Miami. As always, the event featured the highest level of participation of retail leaders and CPG executives. And while many told me the “strategic executive exchanges” between retailers and vendors were very productive, we also heard some feedback from those same parties about the many presentations and forums that were offered to a broader audience. “Too much data” was the prevailing view of more than a dozen executives I spoke with. “I think big data is important. I think relevant data is vital. But it seemed that the speakers and panels featured so much information it was difficult to absorb,” said the president of a regional chain based in the Northeast. “I understand that we need the data and insight in order to compete more effectively in a changing landscape. I know that we need to better understand Millennials and Gen-Yers who comprise our fastest growing groups of shoppers. But it was just an overload. As important as grasping and utilizing the data, we’re still a business of operators and merchants. Too much future casting, not enough input from retail leaders in the presentations.” One retailer noted that of all the forums he attended the two best were the keynote speech by Tim Steiner, founder of British online merchant Ocado, and the closing “State of the Industry” presentation, which featured FMI CEO Leslie Sarasin, Ahold Delhaize USA CEO Kevin Holt, Kings/Balducci’s CEO Judy Spires and Coborn’s chief executive Chris Coborn. “It was the one meeting that I felt connected to the food industry as a group,” said another retail executive from a large Southeast chain. “Too bad, it was the last event scheduled on Monday, when many people had already left.” Personally, I think I understand where FMI and Sarasin are going. A few years ago, after the dissolution of its disappointing Expo, the large trade association had lost a huge revenue source and was struggling for relevancy. Sarasin has kept her eye on the ball and done a good job of rebuilding the industry’s largest trade group. However, while I know they provide significant revenue to the association, maybe it’s time that IRI, Nielsen, Accenture and several other well-endowed market research/analytics organizations take a lesser role at the Midwinter event and perhaps FMI should consider bringing back some of the roundtables and panels that feature the real retail dr
ivers and leaders in our industry. The recent NGA show in Las Vegas – I thought – did a better job of connecting with members (independents and regional chains) with its larger forums and smaller breakout groups. Interestingly, just as the trade show was ending, NGA announced that it has sold an equity stake at its annual event to Clarion Events, a UK-based expo company. Next year’s show moves to a new city – San Diego – after being held in Sin City for many years. In other trade association news comes word that Pam Bailey, president and CEO of the Grocery Manufacturers Association (GMA), will be stepping down after a 10-year tour of duty leading the big group. In my opinion, Bailey did a good job leading the association up until about two years ago when the industry began changing rapidly and became more competitive, global and complex for many manufacturers. In the past year, large corporations such as Campbell’s, Tyson, Cargill, DowDupont, Unilever, Nestle, Dean Foods and Mars all dropped out with some of those suppliers citing conflicting views with the association over issues such as GMO labeling and overall transparency regarding ingredient and nutritional labeling…not shockingly comes more word about Lidl’s struggles in the U.S. In an interview with the German business publication Manager, Klaus Gehrig, CEO of Lidl’s parent company, Schwarz Gruppe, criticized the discounter’s progress in the U.S. thus far, noting that several things have gone wrong including poor site selection, locations that are too large and too expensive to operate and lack of insight into Americans’ product preferences. While Herr Gehrig has pinpointed Lidl’s problems, the bigger task will be correcting them, and I’ve seen little evidence of improvement. Opening smaller stores is part of the answer, but Lidl’s problems in the U.S. are deeper and more complex. On February 15, the discount merchant opened its 49th U.S. store in Fredericksburg, VA (its second unit in that city) and is almost certain to fall well short of the 100 units that were scheduled to open by this June…Whole Foods opened its seventh and newest “365” store in Brooklyn, NY late last month and reports of the demise of the smaller, more discount-oriented organics/natural format seem premature since WFM announced that it will open at least 16 more “365” units in the near future. Two of those units are in the Northeast – Fairfax, VA and Weehawken, NJ – and scheduled to open later this year…Jim Sinegal, the iconic executive who provided the foundation for the dynamic growth of Costco, is leaving the club store merchant’s board after 35 years. Sinegal told shareholders at Costco’s recent annual meeting in Bellevue, WA, “It’s time. I’ve served for a very long period of time and I think the company is in very good hands.” Sinegal’s protege, Craig Jelinek, has served as chief executive since Sinegal left that post in 2012. And at that annual meeting, Jelinek told its holders that Costco business is very healthy with traffic growing 5.9 percent in its recently completed first quarter, its biggest jump in at least a decade. And even when membership fees were raised in the last year, Costco’s renewal rate remained at an impressive 87 percent. I wonder how puzzled Walmart executives continue to be as they witness the ongoing deceleration of the Sam’s Club business. More Walmart news: while the Behemoth posted solid comp store sales and earnings at its U.S. stores – comps were up 2.6 percent and the company’s profit was $2.17 billion in its recently completed 4th quarter – Wall Street punished the world’s largest retailer because its e-commerce sales increase dropped to 23 percent from 50 percent the previous quarter. However, CEO Doug McMillon saw the dip in online sales as temporary, stating: “We have good momentum in the business, with solid sales across Walmart U.S., Sam’s Club and International. We’re making real progress putting our unique assets to work to serve customers in all ways they want to shop…we’re making decisions to position the business for success and investing to win with customers and shareholders.” I agree with him – Walmart is clearly trending in the right direction and is investing heavily in its IT and digital infrastructure which will allow it to remain a powerful organization for many years…good news for our buddy Bill Shaner, former CEO of Save-A-Lot and for a short time the top dog at Haggen. The charismatic executive has formed an investor group, PetGuard Holdings LLC, which recently acquired PetGuard, a Jacksonville, FL-based manufacturer of premium, natural pet food products and supplies. Shaner, who will serve as managing partner and chief executive of PetGuard Holdings, acquired the company from Sharon and Steve Sherman who founded it in 1979. Good luck to a good man…sadly, there are a few deaths to report this month. Oscar-nominated and Emmy-winning composer John Morris has died. Morris and Mel Brooks hooked up for almost all of the comedian/director’s films, including co-writing the title song for “Blazing Saddles” and composing the haunting violin score in “Young Frankenstein.” Both of those great movies were released in 1974. Morris, 91, also penned the original arrangement for “Springtime for Hitler,” from “The Producers” (1967), Brooks’ debut film…Oscar Gamble has passed on. The journeyman power hitting outfielder who played for seven major league teams over a 17-year career, died late last month. Gamble was a solid left-handed hitting outfielder who hit 200 homeruns in his career but was best-known for having the largest, most outrageous Afro hairstyle in the history of the game. When he was first traded to the New York Yankees in 1976 (his first of two stints with the Bronx Bombers), Gamble had to abide by team rules requiring no facial hair or excessive hairstyles. As Yankees owner George Steinbrenner recalled, the news came as a disappointment to Gamble who had an endorsement deal with Afro Sheen. “Pete Sheehy (the Yankees’ veteran clubhouse man) told him he would get no uniform until he got a haircut,” the late Yankees owners said in 1991. “I said, ‘Oscar, I’ve got a barber.’ They brought this guy in and they butchered him. Absolutely butchered him. I was sick to my stomach. I told Oscar, ‘It looks good,’ but I thought to myself, it was absolutely the worst. There were blotches in his scalp.” Gamble was 68 when he died in Birmingham, AL…another “saloon” crooner has also passed away. Vic Damone, 89, whose smooth baritone led the king of all saloon singers – Frank Sinatra – to once state “he had the best pipes in the business” died earlier this month in Miami Beach, FL. Damone, who began singing professionally at the age of 14 in New York, recorded more than 2,500 songs. His biggest hits included “You’re Breaking My Heart” and “On The Street Where You Live.” Except for Tony Bennett, the crooners from the golden age of lounge singers, including Sinatra, Dean Martin, Perry Como, Jerry Vale and Mel Torme, have all died… and finally, the Reverend Dr. Billy Graham has left us to visit a higher authority. The charismatic North Carolina pastor whose evangelizing crusades took him to 185 countries where he preached to an estimated 215 million people, died earlier this month at the age of 99. Graham began his ministry in 1939 and provided counsel and prayer to 13 presidents beginning with Harry S. Truman in the 1940s. Among his closest friends was Dr. Martin Luther King Jr., who once said of Graham: “Had it not been for the ministry of my good friend Dr. Billy Graham, my work in the civil rights movement would not have been as successful as it has been.”