At first blush, it might seem like the motivation behind the recently announced acquisition by Southeastern Grocers (SEG) of approximately 170 Winn-Dixie and Harveys Supermarkets (and more than 150 liquor stores) was created for the survival of its chief executive Anthony Hucker as well as its primary supplier partner for the past 20 years – C&S.
While the partnership between SEG, under Hucker’s leadership, and its primary wholesaler ensures the stores will continue to operate, the new deal could mean much, much more.
Not since before Winn-Dixie announced its initial bankruptcy in 2005 (when Peter Lynch – remember him? – was at the helm) has the iconic supermarket chain, which is celebrating its 100th anniversary this year, been this unencumbered by the constraints of lawyers, financial institutions and burdensome private equity partners.
For the first time in a generation, the Jacksonville, FL-based merchant has a leader that’s got skin in the game, a cap-ex budget that will allow for more than just cosmetic upgrades, and a wholesale partner committed to helping its largest account thrive.
Hucker’s passion was clearly obvious in a video message announcing the acquisition to the grocer’s tens of thousands of associates just prior to the news hitting the wire on February 7.
“I love this company, I love the people and I love what we do together,” said the former Giant Food and Walmart executive. “I always have and always will consider my privilege of serving you and this company to be the greatest honor of my career and one of the highest honors of my life.”
He also spoke of the hard work and sacrifice that lie ahead for the company’s transformation and the increasing complexity of the grocery industry, noting the resiliency of SEG’s associates and the faith he has in their strength, fortitude and ability to navigate adversity as winning difference makers.
Hucker also urged the company’s employees to remain focused and committed to serving Winn-Dixie’s and Harveys’ customers and communities during the transformational journey.
As for Aldi, the gray area of how many stores they’ll operate and the timeline for completion is no longer ambiguous. With about 225 stores already open in Florida, and the promise of 220 more stores to debut in the next 34 months, Aldi’s reputation as a fierce competitor will only increase. And while Winn-Dixie and Harveys will experience the competitive heat, market leader Publix and per store sales leader Walmart will potentially feel even more of the burn.
In continuing his message to the company’s associates, Hucker proclaimed: “We are embarking on a transformational journey to revolutionize the customer experience…we will drive dramatic evolution in how we show up to our customers. We will innovate, we will reinvest and we will win through our quality – best in class loyalty program; best in class own brands; and locally authentic offerings…our vision remains the same – to be the most preferred grocer in the neighborhood.
“We are just beginning to chart our journey for the next century in the Southeast, We are at the very beginning of this journey and we have much to clarify and create. And we will do exactly that – together…we will restore our commitment to trust through transparency.”
With the consummation of this deal, many of the company’s historical roadblocks are removed. If there’s enough capital available to refurbish and modernize many of its stores in the relatively short-term, SEG can complete what would be a remarkable turnaround.
After all, its locations are certainly good enough; its leadership is smart and motivated, its partners are invested, and with most of its stores based in growth areas, the opportunities to succeed are clearly visible.
‘Round The Trade
Although neither Kroger nor Albertsons is making the direct connection that their failed merger was the cause, both chains are now in a job cutting phase. Last month, Albertsons announced that it was riffing employes at all of its divisions as well as at its large administrative offices in Boise, ID (its HQ); Pleasanton, CA; and Phoenix.
And just before we went to press, Albertsons said it was combining its Denver and Intermountain divisions to create one monster-sized unit (the Mountain West division) which will now include stores in Montana, North Dakota South Dakota, Nevada, Utah, Idaho, Wyoming and New Mexico. That’s quite an expansive geography. Brad Street moves from overseeing Albertsons Seattle division to head the newly created unit (no truth to the rumor that Randolph Scott has been named sheriff). Also, the big retailer is rejiggering its regional structure. The three operating regions have been renamed – East, West and California. Although firm estimates are hard to come by, several sources estimated the total number of layoffs at Albertsons to be about 1,000.
Kroger also acknowledged that it is eliminating approximately 200 headquarter jobs at it three office sites in Cincinnati. Although Kroger has reportedly denied that the cutbacks are related to the costs of the failed merger attempt, call me skeptical. Kroger also announced that David Kennerely, most recently CFO for PepsiCo-Europe, has joined America’s largest pure-play supermarket chain, in a similar position. He replaces Todd Foley, who held the chief financial officer post since last year on an interim basis after Gary Millership bolted from the supermarket chain to become Costco’s CFO.
As we all know, tariffs aren’t the only potential change coming from the new White House. A day seemingly doesn’t go by without a new Executive Order being signed, and as such perhaps consumers’ level of confidence has fallen (for the second month in a row) according to a surveys from the University of Michigan and Morning Consult. As former President Biden painfully learned – it’s the economy, stupid, or more precisely the perception of the economy.
No such worries at Amazon as “Godzilla” posted yet another monster showing (forgive the awful pun) it its fourth quarter. To wit: net sales increased 10 percent to $187.7 billion; net profit nearly doubled from $10.6 billion in the corresponding Q4 period last year to $20 billion this year. For its 52-week fiscal, profits pole vaulted from $36.9 billion to $68.6 billion. And the biggest Amazon operating group winner was – Amazon Web Services (as usual). AWS’s annual operating income is now $39.8 billion, a more than $15 billion increase from 2023. Unstoppable!
Local Notes
Ahold Delhaize released its Q4 and full fiscal 2024 sales and earnings and as it’s been for most of last year, the results were decent. But hardly stellar. For the 13-week fourth quarter in the U.S., net sales declined slightly (0.6 percent) to $14.8 billion. However, U.S. operating income jumped 30.1 percent and comp-store revenue grew 1.4 percent (ex-gas). Those are solid results, but ADUSA’s underlying operating margin dipped 1 percent and the closing of 32 Stop & Shop stores (with price investments made at its remaining fleet), the divestiture of FreshDirect (which Ahold Delhaize had to “incentivize” buyer Getir a reported $151 million to acquire) and lower gas prices, all stifled significant U.S growth. Sales from the Stoppie closings are expected to decrease ADUSA’s overall revenue by approximately $550 million. The best U.S. news again came from Food Lion and Hannaford, which posted their 49th and 14th consecutive quarterly comp store sales gains respectively.
One obit to report from our industry: Bob Palmer, the former CEO of C&S Wholesale Grocers, who after retiring in 2023, still served as a board member. Palmer, 65, died suddenly last month, leaving a legacy of dedication, accomplishment and humility. In the rugged grocery wholesale business, nobody had a better touch than Bob. He was serious, focused, professional, well-liked and highly respected. I was always impressed by Bob’s deep insight into the “inside baseball” part of wholesale. He understood both the black & white and the nuance of a business that utilized so many moving parts and produced such small margins. Bob Palmer genuinely liked people and those thousands of associates, customers and vendors that interfaced with him over the past 40 years also admired him – not only for the way he represented C&S but also in the manner he interacted with others. My condolences to his wife Margie and his entire family. Bob Palmer, a giant in our industry, will be missed.
