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Albertsons eyes going public, reports say

Retailer’s improved performance and lowered debt will be factors in decision, Wall Street Journal reports

3 Min Read
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Albertsons is expected to decide within weeks whether to go forward with an IPO that could value it at around $19 billion, according to The Wall Street Journal.Albertsons

Albertsons, the second-largest supermarket chain in the country, is once again considering going public.

The Wall Street Journal on Monday reported that the Boise, Idaho-based operator of more than 2,200 grocery stores is expected to decide within the next few weeks whether to proceed with an initial public offering that could value it at around $19 billion. Citing people familiar with the matter, the Journal reports that Albertsons, which is owned by private equity firm Cerberus Capital Management, has been updating IPO documents that have been filed confidentially with the Securities and Exchange Commission.

After Albertsons’ 2015 merger with Safeway, investors tried to take the company public, looking to raise as much as $1.6 billion in an IPO, but then pulled the offering amid lackluster market conditions for retail stocks in late 2015. In 2018, the company attempted to go public with a $24 billion merger deal with Rite Aid Corp., which fell apart due to investor pushback in August 2018.

The struggling Albertsons had sought to boost its scale, extend its geographic reach and create more synergies to compete against larger, better-capitalized grocery retail rivals — including Walmart, Kroger and Costco — as well as e-tail behemoth Amazon after its acquisition of Whole Foods Market. Underscoring Albertsons’ predicament after the failed Rite Aid deal, a month afterward the company promoted president Jim Donald to CEO and then, six months later, hired Vivek Sankaran from PepsiCo to take over the CEO role. Those developments gave industry observers a negative view of Albertsons’ growth prospects.

Related:Albertsons tallies identical sales gains in Q3

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Now, after less than a year at the helm, Sankaran (left) has re-established the supermarket giant as a force to be reckoned with. He has said that Albertsons is now focused on “four engines of growth”: its stores, e-commerce, customer loyalty and private label. In the most recently reported quarter, the company’s identical-store sales growth was the strongest in three years, and online grocery delivery and pickup sales surged 40%.

“Albertson's business is stronger than I ever thought it could be at this stage,” analyst Scott Mushkin, founder and CEO of R5 Capital, said at SN’s 2019 Financial Analyst Roundtable in October.

Albertsons, which partners with Instacart for home delivery, aimed to have Drive Up & Go pickup service at about 600 of its more than 2,200 stores as of the end of 2019, with more sites to come in 2020. The grocer’s Own Brands portfolio now includes 10 primary brands, with four — Lucerne, O Organics, Signature and Signature Café — topping $1 billion in annual sales. More than 800 new Own Brands products are slated to be added during fiscal 2019.

Related:Albertsons revs up ‘engines of growth’

What’s more, Albertsons has been proactive on the technology front, including an expanded alliance with Takeoff Technologies to open micro-fulfillment centers for online grocery orders. Other efforts include the reintroduction of self-checkout (now in roughly 1,100 stores) and a sweeping partnership with Microsoft to create a seamless omnichannel shopping experience.

In its third-quarter earnings report on Jan. 7, Albertsons notched its eighth straight quarter of identical sales increases and reported improved operating results for its fiscal 2019 third quarter.

"Our identical sales momentum continued in the third quarter, as our core business continues to deliver strong growth," Sankaran said in a statement. "We are focused on providing our customers with an easy shopping experience, exciting merchandise and friendly customer service in our omnichannel shopping environment, and creating deep and lasting customer relationships."

"Our productivity and cost reduction initiatives are also beginning to take shape, which we intend to use to fund strategic growth investments, offset cost inflation and support earnings growth," he added.

 

 

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About the Authors

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Michael Browne

Executive Editor, Supermarket News

Michael Browne joined Supermarket News in 2018 after serving in managing and executive editor capacities at leading B2B media brands including Convenience Store NewsLicense Global and Travel Agent. He also previously served as content production manager for print and digital in the Business Intelligence division of Informa, parent company of Supermarket News and Nation’s Restaurant News.

As executive editor, Mike oversees the editorial content of supermarketnews.com as well as the monthly print publication. He also directs all content-based brand-related projects including the annual Top 75 Retailers report, Category Guide, Retailer of the Year, research surveys and special reports, as well as podcast and webinar content. Mike has also presented and moderated at industry events.

In addition to the positions mentioned above, Mike has also worked as a writer and/or editor for special projects at American Legal Media (ALM), managing editor for Tobacco International, special projects editor at American Banker • Bond Buyer, and as production editor for Bank Technology News and other related financial magazines and journals published by Faulkner & Gray.

A graduate of Fordham University, Mike is based in New York City, where he was born and raised.

Contact Mike at [email protected] or follow him on Twitter and LinkedIn.

 

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