It’s been a great career for Todd Jones who traversed a journey that so many in the grocery industry used to follow, but is now a path that’s almost extinct.
From front end service clerk at a Publix store in New Smyrna Beach, FL in 1980 to chief executive of the company 36 years later, Jones not only protected the great public reputation of the Lakeland, FL merchant, he actually enhanced it. On January 1, Jones will step down as CEO, a position he’s held since 2016, and become the country’s largest employee-owned company executive chairman.
Perhaps Ed Crenshaw, the man whom Jones succeeded and current executive chairman (he will remain on Publix’s board as chairman emeritus) said it best: “Todd has been an outstanding leader. He has been committed to continuing Publix’s success and passionate about the development and promotion of our associates.”
After becoming a store manager in 1988, Jones was promoted to district manager in 1997, regional director in 1999, and VP of the Jacksonville Division in 2003. In 2005, Jones was promoted to senior VP of product business development. He was named president in 2008 and CEO in 2016.
Replacing Jones in the top day-to-day leadership spot at the highly profitable chain will be Kevin Murphy, who has been president of Publix since 2019. His story reads a lot like Jones’: he, too, started as a front-end service clerk at his local Publix in Margate, FL in 1984, before being promoted to store manager seven years later. Murphy was promoted to district manager in 2003, regional director in 2009, and VP of the Miami Division in 2014. In 2016, Murphy was promoted to senior VP of retail operations. He was named president in 2019.
Another Publix lifer, John Goff, a 32-year veteran of the company, will be elevated from senior VP of retail operation to president.
But the story here is Todd Jones, who won’t be going away but will relinquish much of the grind of running a company that operates nearly 1,400 stores in seven states with supermarkets in a new state, Kentucky, opening next year. Publix currently employs more than 250,000 associates.
During his six-year tenure as CEO, Jones expanded the retailer’s presence in Virginia and North Carolina, where it also opened a 2 million square foot distribution center in McLeansville (Guilford County). Publix has also announced plans to expand its tech campus in Lakeland. On the balance sheet, the hard-working Jones proved skillful as well.
In its recently completed third quarter ended September 30, profits at the big merchant reached $833 million on revenue of $14 billion, a 7.2 percent increase over the past year. And while the industry is now seeing comp store sales struggle to reach 2 percent, Publix’s comps remained at a healthy 4.3 percent.
Moreover, Publix’s stock price (stock is only available to the company’s employee shareholders) has risen from approximately $8 a share when Jones was named CEO, to a current $15.10 per share, after accounting for a 5-for-1 stock split in April 2022. Likewise, current revenues now are $54.5 billion (for the year ended December 2022 – the last full year reported); when Jones assumed the helm, annual sales were $34 billion.
Since many in the industry view Publix as kind of a faceless money machine with the advantage of operating in some of America’s fastest-growing markets, their success often taken for granted.
That assumption is inherently wrong. Is there a more dedicated, more results-driven chief executive officer than Todd Jones? The only one I can think of is Walmart’s Doug McMillon. That’s tall cotton.
Jones has proven to be an elite performer. We hope he enjoys his new role.
‘Round the Trade
Kroger took a big step forward last month in the effort to complete its $24.6 billion merger with Albertsons, which was first announced in October 2022. According to CEO Rodney McMullen, the big retailer has completed its “second request” requirement demanded by the FTC to gather more information about the prospective deal. “As of November 15, 2023, Kroger certified substantial compliance with the second request issued by the FTC. We continue to work and cooperate with the FTC and its review of the transaction. This step keeps us on track to close our proposed merger with Albertsons in early 2024. We are confident that we have fulfilled all the commitments we set out in the original merger agreement, including the comprehensive divestiture plan announced with C&S Wholesalers Grocers (to sell 413 stores),” McMullen told financial analysts at the company’s recently completed 3rd quarter conference call.
While Kroger and Albertsons have been working hard behind the scenes to potentially integrate both companies, the ultimate decision still remains with FTC chairwoman Lina Khan (or the courts). While McMullen might feel optimistic about crossing the finish line successfully, I’m not sure I’d make that same bet.
And speaking of earnings, Q3 for the Cincinnati-based operator was kind of a mixed bag. Same store sales (ex-fuel) dipped 0.6 percent after posting a 6.9 percent gain a year ago. However, Kroger’s net earnings jumped to $646 million for the 13-week period ended November 4, an increase from $398 million in Q3 of fiscal 2022. With the instability of the economy still a concern, CFO Gary Millerchip provided shareholders with a cautionary, but slightly optimistic outlook after the financial results were announced: “…Looking to the rest of the year, we are updating our full-year guidance to reflect the impact of near-term economic pressures and food-at-home disinflation. We now expect full-year identical sales without fuel to be in the range of 0.6 percent to 1.0 percent (with underlying growth of 2.1 percent to 2.5 percent after adjusting for the effect of Express Scripts), and adjusted FIFO net operating profit to be in the range of $4.9 to $5.0 billion. At the same time, we are confident in our ability to navigate these near-term headwinds and we are raising the lower end of our full year adjusted net earnings per diluted share guidance range. We now expect adjusted EPS to be between $4.50 to $4.60.”
And earlier this month, UNFI reported its Q1 earnings and for the Providence, RI-based wholesaler/retailer, the stink show continues. Coming off two horrendous quarters, UNFI’s earnings continued to falter badly. The company lost $39 million in the 13 weeks ended November 4 and lowered its already depressing projected outlook for the entirety of FY 2024 from a loss of $36 million-$110 million to $46 million-$120 million. Over the past year, UNFI has plummeted from $38.70 per share to $15.20 per share (on December 5).
Still, CEO Sandy Douglas believes that UNFI’s newly-implemented transformational approach to “enhance shareholder value by structurally improving our capabilities, efficiency and profitability while meaningfully enhancing the customer and supplier experience.” Memo to Douglas: internal efficiencies (if properly executed) will be helpful, but they are not the solution to UNFI’s bigger problems. Augmenting relations with its independent retailers, upgrading its private label program and improving overall internal culture are much more important than a set of technological advances and administrative efficiencies. As stated in my column last month, don’t take my word on this, ask UNFI’s customers in the Mid-Atlantic.
Frightening thought of the month – in the next few months, there will be more Gen Z employees in the national workforce than baby boomers. If you’re not that caught up on the age range of Gen Zers, young’uns born between 1997 and 2012 would qualify. And now you partly know why I get more depressed each day.
In recent months, we’ve taken (finally retired) Starbucks CEO Howard Schultz to the woodshed for his boorish actions with some of the company’s associates who have or are attempting to unionize. But compared to Elon Musk, Schultz comes off as a choir boy. Ever since the Tesla founder acquired X (formerly Twitter) in October 2022 for $44 billion, he’s done nearly everything in his power to ruin the once popular social media platform. And his bad behavior continues to get worse. In the past few weeks alone, the (reportedly) wealthiest man in America supported an old antisemitic trope (think replacement theory) and then, when he appeared at the New York Times DealBook summit, he called advertisers who had yanked their ads from X blackmailers, adding that they could “f— themselves.” Thus far, more than half of all the approximately 1,000 corporations that advertised on the platform have withdrawn their ads including Apple, Comcast, Disney, IBM, Paramount, Warner Bros. and most recently Walmart. Clearly, it took a great deal of acumen and intelligence to amass the multi-billion dollar fortune that Musk possesses. But as proven once again, business savvy and public behavior aren’t at all connected. In that regard, Musk is as dumb as a bag of hair.
Local Notes
Bankrupt and inept drug chain Rite Aid announced that it will close another 31 stores in the near future. That’s in addition to the more than 100 units the Philadelphia-based drug chain said would be shuttered shortly after Chapter 11 protection was filed in October. In the Mid-Atlantic, that batch includes one store in Maryland (Delmar); four stores in Pennsylvania (Bellefonte, Philadelphia, Pittsburgh and West Chester); two stores in New Jersey (Beachwood and Moorestown); two stores in New York (the Bronx and Miller Place); and two stores in Virginia (Norfolk and Williamsburg). All told, Rite Aid may end up with 500 fewer stores than it started with just a few months earlier.
At The Giant Company, a tip of the hat to Brian Lorenz and Kathy Sweigert who have been promoted to VP of omnichannel fresh merchandising (Lorenz) and VP-Mid-Atlantic division (Sweigert). They fill the posts recently held by Dave Lessard and Rebecca Lupfer who were promoted to SVP-operations and chief financial officer respectively. Brian and Kathy are experienced young executives with a lot of energy and talent, and both are worthy of their promotions. Also, Ahold Delhaize USA has named Alex Holt as its chief sustainability officer, effective no later than June 1. Holt currently holds the same title with Woolworth Group, the largest food retailer in Australia and New Zealand.
Aldi earlier this month cut the ribbon on a new unit in College Park, marking its 65th store in Maryland. The country’s second largest grocer (in terms of store count) will be squaring up with German rival Lidl, which opened a store in the college community in 2019.
About two dozen Amazon workers at the company’s fulfillment center in W. Deptford, NJ, walked off their jobs on Cyber Monday (November 27), citing the need for better wages and improved working conditions. The job action is part of a multi-state effort to organize the country’s largest online retailer. While there have been attempted unionization efforts at several Amazon DCs, only one facility in Staten Island (in April 2022) has been successful thus far. Since then, Amazon has lost several legal appeals to overturn the outcome of that election. Currently, Amazon continues to appeal its case to a higher jurisdiction while refusing negotiate a contract with the newly formed Amazon Labor Union…an informal survey (by me) with about 10 Mid-Atlantic retailers indicates that Thanksgiving sales were slightly better than expected, with the hopes that some of that momentum would continue through the end of the holiday season.
“We’ve got to be realistic about the situation. The perception that the economy is still vulnerable remains, which casts an underlying layer of uncertainty with many of our customers. Unit sales remain down and despite a moderation of inflation, prices are still too high when compared to 2021 levels. Many of us are also still feeling the big hit we received when SNAP benefits were radically cut in March. Our expectations were fairly modest and thus far we’re encouraged by our Thanksgiving results,” said a senior executive at a leading regional chain whose response was similar to those of others polled.
I’m very sad to report the passing of Jim Bartkowiak, 75, who directed the frozen, dairy and ethnic categories at Shoppers Food for the past 37 years and spent 51 years in the grocery biz. Jim was one of the good guys in our industry – witty, personable and extremely dedicated and knowledgeable about his craft. He was a mentor to many people in this industry and his work ethic and tenacity were legendary to his peers at Shoppers and the vendors who called on him.
What I remember best about Jim was his vision about the opportunities available in ethnic merchandising, especially with Hispanic customers. Seeing the change in population diversity in a rapidly evolving Baltimore-Washington market, Bartkowiak knew there was tremendous potential for Shoppers to take advantage of that shift. As he would often do, Jim did the research and then enlisted several Hispanic-oriented distributors and suppliers (most notably Elda Devarie, founder of EMD Sales), to help him execute his plan. Within months, no conventional supermarket merchant in the B-W market was operating better ethnic department than Shoppers.
Jim Bartkowiak loved his family and all things Baltimore. And he also loved working for Shoppers. Jim, we’ll miss you.
Denny Laine has also died. You may have never heard of Laine, but his presence in two extremely popular bands in the 1960s and 1970s was certainly worth noting. The British-born guitar player and singer was a co-founder of the Moody Blues and actually sang lead on the group’s first hit song “Go Now” in 1964. However, Laine quit the band two years later, and the Moody Blues added vocalist/bassist Justin Heywood and vocalist/guitarist John Lodge and went on to have several mega-hit songs including “Nights in White Satin” (1967) and “Tuesday Afternoon” (1968). In 1971, Laine received a call from Paul McCartney, by then a solo artist, who was putting together a band to go on the road and to record. The former Beatle called the band Wings. He enlisted Laine to be his guitar player and primary backup singer. Laine appeared on all seven Wings albums and received four Grammy nominations with the band and won two – best pop vocal performance by a duo, group or chorus in 1975, for “Band on the Run,” and best rock instrumental performance in 1980, for “Rockestra Theme.” Laine was inducted into the Rock & Roll Hall of Fame in 2018 as a founding member of the Moody Blues. Denny Laine, 79, was a much-underrated musician, except to his musical peers who recognized the depth of his talent.
Also leaving this earth at 101 (his age, not the California highway) was Norman Lear, the iconic producer (and sometimes writer) of such TV shows as “All in the Family,” The Jeffersons,” Maude” and “Sanford and Son.” In 2012, Lear told the New York Times that television comedies in the mid to late 1960s were vanilla and unrealistic, noting “the biggest problem any family faced was ‘Mother dented the car, and how do you keep Dad from finding out’; ‘the boss is coming to dinner, and the roast’s ruined.’ The message that was sending out was that we didn’t have any problems.” Lear’s approach to comedy was more topical and biting beginning with “All in the Family” in 1971, where seemingly every social and political topic was covered, mostly by the great Carroll O’Connor, who played breadwinner and resident bigot and racist Archie Bunker. That show and that character helped change the face of comedy television forever. In 1972, it was reported that at 8:00 p.m. every Saturday, 60 percent of all television sets in America were watching.
But Lear was more than a TV producer – he wrote the screenplay for the film “Come Blow Your Horn” (1963), starring Frank Sinatra, and directed by his business partner Bud Yorkin, based on a Neil Simon play. His screenplay for “Divorce, American Style” (1967), starring Dick Van Dyke and Debbie Reynolds, was nominated for an Academy Award. In 2019, the PBS documentary, “Live in Front of a Studio Audience: Norman Lear’s ‘All in the Family’ and ‘The Jeffersons’” won an Emmy Award, making Lear, at 97, the oldest Emmy winner in history. It was Lear’s fifth Emmy but his first in 46 years. And on July 27, 2022, the day he turned 100, the Times published a guest essay by Lear in which he pondered about the state of the nation remarking, “To be honest, I’m a bit worried that I may be in better shape than our democracy is.” What a life he lived, Norman Lear was a true American original who was still productive after he passed the century mark.