You are here
NEW YORK -- Supervalu, the wholesaler-retailer poised to become the second biggest primarily-traditional grocer in the country, passed out a few details to investors on its plans for integration of huge chunks of Albertsons, at a Bear Stearns conference here yesterday. Judging from the questions posed by attendees from the financial community, however, it was clear there's a huge appetite for more information that is yet to be sated.
Yolanda Scharton, Supervalu's v.p., corporate communications and investor relations, appeared at the conference in place of c.e.o. Jeff Noddle, who she said had been temporarily flattened by the flu. Scharton reiterated the basic facts of the $17.4 billion "transformative transaction" that will bulk Supervalu up to a $44 billion grocery and pharmacy retail powerhouse, with a coast-to-coast presence including 2,505 stores. She characterized the deal as the logical next step in line with Supervalu's legacy of 135 years in the grocery business, fitting well with an existing strategy of going to market with multiple diverse formats, and wielding formidable economies of scale, a strong supply chain backbone, and merchandising talent empowered to act on customized, local expertise.
Scharton also boasted of an estimated $1.1 billion in available capital from the merger, putting a new Supervalu in good position to invest in new stores and an "active" remodeling program. She went on to note that 85 percent of Supervalu's current store base is new or remodeled within the past seven years.
When questioned on whether that $1.1 billion sum might seem less impressive in light of higher cap-ex plans put forth by both Safeway and Kroger, however, Scharton countered by emphasizing that the $1.1 billion was not a final number and could be adjusted once the two operations are joined. "We feel our store fleet is in very good shape," she added.
Scharton said that while the transaction has yet to close pending shareholder approval and antitrust clearance, Supervalu has already launched 10 enterprise teams across functional and operational disciplines with talent from both companies, headed up by Supervalu's president and c.o.o. Mike Jackson. She deflected questions on whether the company has received any requests to divest pieces of the acquisition in order to clear the way for regulatory approval.
She also chose not to field a series of questions probing issues such as potential wholesale client conflicts, whether price positions would need revamping in certain markets, and if the various buying structures of Albertsons' acquired operations would be centralized, repeating more than once that it "wouldn't be fair" to make comments until the two operations were further along the path to transition and integration.
Scharton was somewhat less tentative about her company's stance with regard to the competitive landscapes in the many markets in which it will shortly become a power player. "We are very comfortable with what we see," she said. That doesn't mean there won't be a fight, but we are ready."