“You serve me, and I’ll serve you. Swing your partners, all get screwed. Bring your lawyer, and I’ll bring mine. Get together, and we could have a bad time.”
Classic lyrics from the great George Harrison song, “Sue Me, Sue You Blues.” More than 50 years later those lyrics are still relevant when analyzing the bitter ending to the failed merger between Kroger and Albertsons. And now you can add C&S Wholesale Grocers to the mix – the Keene, NH-based wholesaler is also suing Kroger in the aftermath of a deal gone bad.
I’ve read hundreds of pages of documents, from the federal trial in Portland, OR in September 2024 and in the proceeding multiple lawsuits. I’ve also talked to nearly a dozen industry executives who work or have worked for Kroger and Albertsons.
There are a few things that are consistently clear. From the outset, Kroger was running the show – it was the larger organization that had fared much better with the FTC in prior merger and acquisition activity.
Some (from the Albertsons court) termed Kroger’s negotiating style as overbearing and described now exiled CEO Rodney McMullen as a bully.
In the most recently filed litigation – that by Kroger on March 25 – the big chain charged Albertsons and C&S with poisoning the outcome of the deal by secretly conspiring to impede the process which included seeking more stores to be divested. That original divestment amount was 413 stores – that number that was ultimately increased by 166 supermarkets.
While Kroger confirmed that the original 413 store deal (plus eight distribution centers and two office complexes) was agreed to by C&S, sources at Albertsons and C&S said both companies pushed Kroger to include more and better stores in the package. In fact, one Albertsons official told me that many of the stores in the original package were among the worst in the combined portfolio of both retailers. Kroger also inferred that the pushback from C&S and Albertsons on the original package caused the FTC to also reject the proposal. That seems almost laughable; upon further study of the stores themselves, I’m sure former FTC chairwoman Lina Khan and her team of commissioners would have figured it out by themselves.
So, when the package was revised seven months later, not only were more stores added, many of the poor stores in the original package were eliminated, replaced by higher volume and more profitable units.
Kroger’s claim that Albertsons ultimately conspired to kill the deal also seems questionable when you consider that (according to Albertsons’ amended lawsuit filed in March) the Boise-based merchant said it would add $800 million to the deal if Kroger agreed to expand its assets to be divested. According to the suit, Kroger never responded to the offer.
Unfortunately, nothing constructive will be resolved by this continuing finger-pointing and ongoing litigation. It’s not exactly ambulance-chasing, but it’s highly distracting and unproductive.
Imagine how $1.5 billion (and counting) could have been utilized by both companies to improve their current businesses.
‘Round The Trade
Amazon said it will restructure its grocery unit in a move that will join the company’s “Fresh” and “Go” units along with Whole Foods. The catalyst to combine all of Amazon’s grocery services under one team was Jason Buechel, former Whole Foods president who was recently promoted to VP of the company’s Worldwide Grocery Stores.
More Amazon news: after nearly four years of ineptitude, Amazon Fresh (AF) is finally making progress. I say that after visiting the newest AF store in Silver Spring, MD which opened late last month. At 33,000 square feet, the new store has the size to offer more complete departments and better merchandising. Pricing was good, but nowhere near similar sized smaller boxes like Aldi and Lidl, and customer service was also noticeably better (as you would expect at a store opening event). The store still isn’t a fully comfortable shopping experience, but the improvement was noticeable. The retailer also closed one of its first DC-area stores last month in Manassas, VA, a unit which debuted in July 2022.
UNFI, which is also making sales and earnings progress (it’s still losing money, but less of it), has reached agreements with three Teamsters Locals in Florida, Georgia and Illinois for its warehouse associates and truck drivers. The new 5-year pacts will provide those workers with an $8 hourly increase over the life of the contracts and improve healthcare coverage and upgrade its pension plans for its members…
Have you looked at your financial portfolio lately? If you have, you can’t be happy. And as I write this, tariffs just went into effect, which is sure to create a more inflationary environment. But don’t take my word – The Conference Board’s “Consumer Confidence Index” decreased 7.2 points, and a recap of all its consumers indices last month reveals some of the lowest confidence scores in more than a decade. Somehow, I’m not feeling so “liberated.”
We all know about Walmart upgrading its digital and delivery platforms over the past decade, and last year we reported about the company’s aggressive plan to upgrade its existing physical stores (and also build new ones). Now comes word that the “Behemoth” will significantly expand its fuel and convenience centers which now operate in 34 states. In the next nine months Walmart will open about 50 new fuel stations, raising its total to 450 units.
From a financial standpoint, it’s good to be Ron Sargent. The newly appointed interim CEO of Kroger will earn a base salary of $4.35 million annually and will receive about 60,000 shared of restricted stock, valued at approximately $4 million. By the way, while the search is continuing for a new Kroger full-time chief executive, one name we keep hearing is Greg Foran, former CEO of Walmart’s U.S. stores from 2014-2019. More recently, he was CEO of Air New Zealand in his native country, a position he will be leaving in October.
Local Notes
Good news for the folks at B. Green & Co., which last month added to its independent retail roster by acquiring Angel’s Market in Pasadena, MD from the Clocker family which acquired the store in 1960. “We are honored to welcome Angel’s Food Market into the Green Valley Marketplace family. Angels has built a remarkable legacy in Pasadena, and we are committed to preserving its community-driven spirit, while introducing new features that enhance the shopping experience,” said Rick Rodgers, CEO of Green Valley. “Our commitment to service goes beyond stocking the shelves with traditional groceries, we are dedicated to delivering a unique shopping experience that includes a wide variety of local products, fresh store prepared original recipes, made from scratch Laurer’s Luscious sweets and baked goods, signature GV items and departments that won’t disappoint. We want to go beyond just providing great service, quality and value to our customers, we want to build a partnership and be an integral part of the neighborhoods and communities they live in.” The new acquisition will be Green Valley’s fourth Baltimore area store and third in Anne Arundel County. After the conversion process is completed, Green Valley will host a grand opening later this spring.
A tip of the hat to Jeff Bleichner, VP and general manager of Shoppers Food, who retired last month after 43 years with the Bowie, MD-based retailer, a division of UNFI. After four years with A&P, Bleichner joined Jumbo Food Stores, the predecessor to Shoppers that was founded by owners Kenneth and Irving Herman. Starting at the company’s Takoma Park, MD store, Bleichner rose through the ranks to become a VP in 2006 and general manager of the company when Bob Gleeson left to join Weis Markets in 2018. Despite many peaks and valleys and working with multiple owners, Jeff has always handled himself in a classy and professional manner, earning the respect of his associates and the vendors who interfaced with him. Jeff, I hope all your future endeavors are as successful as your career was.
Giant Food cut the ribbon late last month on a new 66,000 square feet store in Bowie, MD. The new unit replaces an older and smaller store and is located less than a mile away from Giant’s original store in that PG County berg. The supermarket is part of a huge mixed-use project on Route 3 where there’s a ton of development going on. At sister Ahold Delhaize USA brand, The Giant Company (TGC), also celebrated a new store earlier this month – a 50,000 square foot supermarket in densely populated Jenkintown, PA. And just before presstime, we learned that TGC will also be breaking ground on another new store – a 60,000 square footer in Parkesburg, PA, which will be the regional chain’s 14th store in Chester County.
Wawa is focusing on Virginia as its next big growth target. The regional c-store chain plans to open 60 new stores in the I-81 corridor over the next decade, including 8 this year. Moreover, the Washington Business Journal is reporting that the privately held merchant is looking to add as many as 20 additional stores in Arlngton, Fairfax and Loudoun counties in the Old Dominion.]
Good news for Budweiser drinkers in Virginia. Anheuser-Busch (owned by global monolith InBev) announced that it will invest $4.2 million to upgrade its brewery in Williamsburg, which it built in 1972. The upgrade is part of $2 billion enhancement program to all its facilities nationally.
Notable deaths this month include Jesse Colin Young, the very talented folk/rock singer whose seminal song “Get Together” remains one of memorable tunes of the past 60 years. Born Perry Miller in Queens, he gravitated to the folk scene in Greenwich Village in the early 1960s before moving to San Francisco as the pop music scene moved west. “Get Together” was written and recorded by Chet Powers (later known as Dino Valenti of Quicksilver Messenger Service) in 1963. The song went nowhere. In 1967, having formed the Youngbloods, the song was released again with Young singing. Again, the song didn’t attract much attention. However, two years later when the tune was featured in a public service announcement by the National Conference of Christians and Jews, the song gained traction. The rest is history. But Young was far from a one-hit wonder – his smooth tenor voice was featured on such excellent songs as “Darkness, Darkness,” “Sunlight” and “Ride the Wind.” And the Youngbloods became one of the most notable bands of the late 60s and early 70s. Jesse Colin Young was 83 when he passed.
Also leaving us was John Feinstein, the gifted author and columnist who wrote several of the best and most popular sports-oriented books of the past four decades. Beginning with “Season on the Brink” in 1986, which closely tracked the ups-and-downs of the Indiana University basketball team and its mercurial coach Bobby Knight during the 1985 season. That led to other best-sellers including “A Good Walk Spoiled: Days and Nights on the PGA Tour” and “Let Me Tell You a Story: A Lifetime in the Game” (which he collaborated with hall of Fame basketball coach “Red” Auerbach). All told, Feinstein wrote more than 40 books as well as contributing columns to The Washington Post for more than 45 years. In fact, his last column, on Michigan State basketball coach Tom Izzo, appeared on March 13, the day of his passing at the age of 69.
George Foreman, former heavyweight boxing champ and part-time grill salesman, also died last month at the age of 76. Foreman was a self-proclaimed bully growing up and he dropped out of high school in Texas to join the Job Corps, where he learned how to box. Success came quickly – he became the Olympic heavyweight champion in 1968 and turned professional shortly thereafter where he also attained rapid success. After winning his first 37 bouts, Foreman got his title shot against Joe Frazier in 1973. He knocked out “Smokin’ Joe” after flooring him six times – leading announcer Howard Cosell to famously proclaim “Down goes Frazier! Down goes Frazier!” In 1974, he fought former heavyweight champ Muhammed Ali in Zaire (now the Democratic Republic of Congo) in the legendary “Rumble in the Jungle” match. Ali prevailed, handing Foreman his first career defeat. He began devoting more time to his deeply religious beliefs and when he lost to Jimmy Young in 1977, he retired to become a minister in Houston. By 1987, he had unretired and four years later earned another shot at the heavyweight championship against Evander Holyfield, where he lost on a decision. Still, Foreman wasn’t done and by 1994 he was back fighting for the heavyweight crown against Michael Moorer (who had defeated Holyfield to become champ). For the first nine rounds, Foreman was trailing decisively on all of the judge’s scorecards. But Foreman could always punch and in the 10th he knocked out Moorer with a right hand to the jaw and again became heavyweight boxing’s king at the age of 45. He hung up the gloves in 1997. While he was still boxing, Foreman began hawking the “George Foreman Grill,” which was acquired by Salton in 1999 for $137.5 million (Foreman’s cut was $103.1 million). Foreman leaves six daughter and five sons (all named George).
