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Hellman & Friedman to divest stake in Grocery Outlet

Former majority owner completes exit from fast-growing value grocer

Russell Redman

May 28, 2020

3 Min Read
Grocery_Outlet-new_store.jpg
Plans call for Hellman & Friedman to distribute its 9.6 million Grocery Outlet shares, about 11% of the retailer's total outstanding shares of common stock, to equity shareholders on May 28.Grocery Outlet

Grocery Outlet Holding Corp.’s onetime majority owner, private equity firm Hellman & Friedman LLC, is slated to sell off its remaining shares in the extreme-value grocery retailer.

Plans call for Hellman & Friedman (H&F) to distribute its 9.6 million shares, about 11% of Grocery Outlet’s total outstanding shares of common stock, to equity shareholders on May 28.

In late 2014, Grocery Outlet’s senior management partnered with an investment fund affiliated with H&F to acquire the chain from principal owner Berkshire Partners LLC. With the transaction, H&F held a roughly 80% share in the retailer, while management and founding family retained an approximately 20% share.

Grocery Outlet completed an initial public offering in June 2019 after filing for the IPO about a month earlier. Upon the company’s public debut, H&F held a more than 60% share, and since then the investment firm has gradually scaled down its interest in the retailer. In its fiscal 2019 annual report, Grocery Outlet said H&F owned about 30% of the chain’s outstanding common stock as of March 20, 2020.

“The ongoing reduction of Hellman & Friedman’s ownership stake has been a natural and expected part of Grocery Outlet’s maturation as a publicly traded corporation,” Grocery Outlet CEO Eric Lindberg said in a statement. “Hellman & Friedman has been a valued partner since their original investment in our company in 2014. Over that time, we have expanded our leadership team and strengthened our supply chain and corporate infrastructure in order to support our long-term growth objectives.”

Related:Grocery Outlet sees net income more than double in first quarter

Emeryville, Calif.-based Grocery Outlet finished its 2019 fiscal year, ended Dec. 28, with net sales up 11.9% to $2.56 billion and comparable-store sales rising 5.2%. As of the fiscal 2019 year-end, Grocery Outlet had 347 stores, including 10 new locations opened during the year, compared with 316 stores and 11 new locations at the fiscal 2018 year-end.

Earlier this month, Grocery Outlet reported booming first-quarter sales from higher demand amid the coronavirus pandemic. For the quarter ended March 28, net sales jumped 25.4% to $760.3 million and comp-store sales surged by 17.4%. The company also continued its retail expansion, opening eight net new stores during the quarter and closing out the period with 355 locations in California, Washington, Oregon, Pennsylvania, Idaho and Nevada, compared with 323 stores a year earlier.

“We continue to believe that Grocery Outlet is an exceptional company with a resilient business model and significant long-term growth potential,” stated Grocery Outlet Chairman and H&F partner Erik Ragatz. “We have worked closely with the management team since our initial investment and have great confidence in their ability to achieve ongoing success.”

Related:Grocery Outlet makes its public debut

MacGregor Read, the grandson of Grocery Outlet founder Jim Read, transitioned from executive vice chairman to nonexecutive vice chairman as of April 1. He became co-CEO in 2006 with current Grocery Outlet CEO Eric Lindberg and held that post through the end of 2018, when he shifted to the executive vice chairman role and Lindberg was named as the sole CEO. Both are third-generation members of the Read family. Also part of Grocery Outlet’s top leadership team is R.J. Sheedy, who has served as president since December 2018.

This past November, Grocery Outlet announced an expansion of its board from nine to 11 members with the appointments of John “Jeb” Bachman, a former PriceWaterhouseCoopers executive, and Mary Kay Haben, a veteran consumer packaged goods executive, as independent directors.

About the Author

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

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