Bloomberg is reporting that Fairway Market is once again up for sale. If true, the news shouldn’t be that surprising that the once-iconic Metro New York merchant is looking for a buyer. Since emerging from bankruptcy three years ago, Fairway has had little capital investment money at its disposal, while also seeing the market around them continue to grow. During that period in Manhattan and Brooklyn alone, new Trader Joe’s, Whole Foods, Target and Morton Williams stores have opened. Additionally, majority new private equity owners Brigade Capital Management, Blackstone Group LP’s GSO Capital Partners and the Goldman Sachs Group were never likely to seek a long-term engagement with Fairway. And in case you haven’t noticed, with few exceptions, the PE sector has been running away from investing in food retail for the past couple of years…
‘Round The Trade
One of Ahold Delhaize’s key executives will be leaving the Amsterdam-based retailer in the coming months. Jeff Carr, CFO, who has been a prime shaker at the international retailer since 2011, will depart in the spring. A search has begun for his replacement…according to The Wall Street Journal, private equity firm The Carlyle Group has hired white-shoe law firm Kirkland & Ellis LLP to help advise one of its companies, food brokerage firm Acosta Inc., on ways to restructure the Jacksonville, FL sales agency’s $2.7 billion in debt as it nears a key interest payment. The story notes that Acosta has notified its lenders and bondholders they should sign nondisclosure agreements to enter into formal restructuring negotiations in advance of an expected credit default, according to sources. Acosta, the story adds, is likely to miss a roughly $31 million coupon payment due on October 1 to bondholders that own $800 million in unsecured debt maturing in 2022. Those bonds currently trade at pennies on the dollar, according to its sources. On September 13, Acosta reportedly posted a deep earnings decline for the three months ended July 31. Revenue reportedly declined by 14.5 percent year-over-year to $377 million for the quarter, while adjusted earnings before interest, taxes, depreciation and amortization declined by 6.4 percent to $60.2 million. The company attributed the decline to certain client losses (Clorox was a major hit), service-level reductions and continued industry contraction. The Journal piece also noted that as of July 31, Acosta had just $36 million of unrestricted cash on its balance sheet and minimal availability on its revolving credit facility.
“We have retained outside legal and financial advisors to assist us in evaluating our options and have been working collaboratively with our lenders to improve our capital structure,” according to a statement from Acosta. “Our objective is to strengthen Acosta for the future and ensure we remain the most competitive sales and marketing agency in the industry for our clients, customers and employees. There will be no disruption to our business as we continue to work with our lenders.” Carlyle reportedly paid approximately $4.8 billion in 2014 to acquire what was then the largest food brokerage firm in the county…scary fact of the month: according to Digital Commerce 360 Research, Amazon now controls 37 percent of all U.S. online sales, up from 34 percent in in 2017…dumbest survey of the month: Whole Foods has completed a study in which it claims, among other things, that millennials will spend more money if they can get high quality food. Wow, what a mind-blowing conclusion! My dog would spend more money on high-quality dog food, too, if he could find a way to get to the store and pay for those products. And I guess that an aging baby boomer like me would spend more money on quality food if parent company Amazon could send me that “millennial conversion kit” I ordered. Talk about self-serving and needless….
Local Notes
Huge opening at Stew Leonard’s first New Jersey store in Paramus, an 80,000 square foot “theme park of perishable and specialty food.” While I expect ShopRite, Stop & Shop and Trader Joe’s to get dinged, I believe that Fairway’s unit located about a mile away will feel the brunt of the new store’s mega-volume potential (could it be that the future impact of one Stew Leonard’s store with a potential to generate about $80 million in annual sales was the catalyst for Fairway’s owners to want to exit?). And as part of the new Stew Leonard’s store celebration, the Norwalk, CT-based retailer constructed what it calls “the nation’s largest birthday card.” The 31-foot high card honors Bruce Springsteen’s 70th birthday (can you believe Springsteen will be 70 on 9/23?). A guitar-shaped cake is also part of the festivities which will be attended by Stew Leonard officials, politicos and members of Bruuuce’s fan club. And if “The Boss” can’t be on hand, maybe they can pipe in a few verses of “Growing Up.”…
Chris Kenny, CEO of the six ShopRite stores in Delaware, and entrepreneur/philanthropist Ben duPont have formed “A Better Delaware,” a non-partisan grassroots organization that will advocate for pro-growth, pro-job policies and greater transparency and accountability in state government. In its mission statement, the new organization notes Delaware’s declining status as a state that’s business friendly. It wants to help provide taxpayers with a voice in changing the direction of “our state to make it more business friendly.” On the subject of ShopRite, the former Jeff Brown store on Haverford Avenue in West Philly which closed in March will now become part of Key Food’s store network, as that large retail co-op continues to expand its reach from its core Metro New York bas. And there’s talk that a new ShopRite might be coming to Atlantic City, which would be a boon to the ailing town, which certainly would qualify as a food desert…
The city’s Casino Reinvestment Development Authority will shortly begin talks with Village Supermarkets (which has stores in nearby Absecon, Egg Harbor Township and Somers Point) on developing and operating a new 40,000 square foot unit on land the CDRA owns on Baltic and Indiana Avenues…another potential store opening, far different from the demographics of AC, is likely to occur on Madison Ave (at E. 28th Street) in Manhattan. We hear that Whole Foods has agreed to lease 60,000 square feet of space on two levels in what is part of a large 870,000 square foot office tower that is currently undergoing major renovations. The Mad Ave unit would be WFM’s 11th Manhattan store and 14th in NYC…
Lee Delany has been promoted to president of BJ’s Wholesale Club. The former industry consultant (Bain & Co., Deloitte), joined the Westborough, MA-based club operator in 2016 as EVP-chief growth officer and two years later was named chief commercial officer. He will continue to report to BJ’s chairman and president Christopher Baldwin. The company, which was previously owned by PE firms Leonard Green and CVC Capital Partners, went public in June 2018. Its launch price was $23.65; as of September 20, BJ’s stock is trading at $26.25 per share…Rich Durante has left The Fresh Market as CMO and is back in his home state of New Jersey doing some consulting. Durante, one of the most popular and intelligent merchants in the biz, joined the Greensboro, NC-based upscale merchant in April 2017 after having served in many executive functions (including president) for Kings/Balducci’s for nearly 30 years…
Coincidence of the month? Lidl has really accelerated its new store opening pace over the past 90 days. One of its newest stores, which debuted on September 10, is located in the beautiful Ocean County hamlet of Lacey, NJ. Guess who opened on the same very same day? Aldi. Actually, Lidl moved up its planned September 12 opening just to send a message to its chief rival, both here and in Europe. Be careful what you wish for…
From the Food Trade News obit desk comes news of these recent deaths…one of the best political journalists of the past generation, Cokie Roberts, has died at the age of 75. Roberts’ warm but direct interviewing style was always refreshing to listen to. What also impressed me about the Louisiana native (whose mother and father were both U.S. Senators) was her intelligence and high level of preparation. She began her career working for NPR in 1978 and joined ABC News in 1988, where she spent the rest of her career…from the world of music we lost two unique personalities and talents who first made their marks in the 1970s. Ric Ocasek, songwriter and lead singer of the progressive rock band The Cars, died earlier this month in Manhattan. The Cars’ distinctive sound – a mixture of punk, rockabilly and synth-pop – could be heard in such massive hits as “Just What I Needed” (1978) and “Shake It Up” (1981).” The Cars disbanded in 1988 and Ocasek began performing his own music. The band regrouped in 2011 for a final album, “Move Like This.” Ocasek was 75…also leaving us was gravelly-voiced rock singer Eddie Money (born Edward Mahoney). The former New York Police Academy trainee (despite the urban legend, he was never a New York City cop) passed away earlier this month at the age of 70. After quitting the police academy, Money moved to the West Coast to try his hand at singing. He was signed by rock impresario Bill Graham and soon had a contract with Columbia Records. Shortly thereafter he released his first album which included big hits “Baby Hold On” and “Two Tickets to Paradise.” His career had many ups and downs, plagued by his drug use and poor financial advice. Up until the time of his death, Money and his family were the focus of an AXSTV reality series, “Real Money” (2018). Eddie Money was a mercurial talent who possessed a great rock voice. Let’s hope the good Lord has reserved at least one ticket to paradise for him.