Colorado’s fourth-largest grocer may put itself on the market after struggling to keep shoppers in an increasingly competitive environment.
Boise, Idaho-based Albertsons on Friday said it hired Goldman Sachs & Co. and The Blackstone Group LP to assist with “exploring strategic alternatives to increase shareholder value.” Such alternatives might include a sale, the company said. It did not provide a time frame.
Some analysts speculated that the company will be snapped up by a private-equity firm, while others said the company may sell itself in pieces.
In Colorado, Albertsons operates 60 stores, according to the Shelby Report of the Southwest. As of late last year, the company employed 4,000 people in the state. Albertsons representatives did not return a message seeking updated employment data.
While the company is the state’s third-largest grocer based on the number of stores, it’s a distant fourth behind King Soopers, Safeway and Wal-Mart based on market share. Albertsons attracted just 8.9 percent of statewide grocery dollars, compared with King Soopers’ 35.6 percent, Safeway’s 22 percent and Wal-Mart’s 19.7 percent, according to data from Shelby.
Nationally, Albertsons’ profit has fallen in three of the past four years.
“They were so focused on being efficient and on doing things that would allow them to be viewed as competitive with Wal-Mart,” said Kevin Coupe, founder and editor of MorningNewsBeat.com, a Darien, Conn.-based website for the food retailing and manufacturing business. “They weren’t providing a shopping experience that spoke to what customers wanted and needed.”
Analysts have faulted Albertsons management for not effectively charting a course that would allow it to remain competitive.
“They were simply not delivering what they needed to deliver, and something was going to have to change,” Coupe said.
Locally, Albertsons had faced speculation it would back out of the market because chief executive Larry Johnston said the company didn’t want to be in markets where it couldn’t be No. 1 or No. 2. The company sold a store at South Colorado Boulevard and East Evans Avenue in January at about the same time it launched a rebranding effort to convert its Colorado pharmacies to the Savon Drugs nameplate.
Roughly half of Albertsons’ Colorado workers are unionized. If the company sells to another grocery store operator, the buyer would have to uphold the workers’ existing contract, said Dave Minshall, a spokesman for United Food and Commercial Workers Local 7.
Analysts were divided as to whether the company will sell itself off in parts or in its entirety.
“The most logical move would be to sell all of their Southern stores stretching from Arizona to Texas in the Southwest and to Florida in the Southeast,” said Burt P. Flickinger III, managing director of New York-based Strategic Resource Group, a consulting firm.
Other analysts contended that a large investment firm or a European retail chain – including French retailer Carrefour SA, British grocer Tesco Plc or Belgium’s Delhaize Group, which owns Food Lion supermarkets – could snap up the whole company. Most did not see King Soopers’ owner, Kroger, or Safeway buying the whole company because of overlapping markets and antitrust concerns.
The company has a market value of $7.64 billion and debt of $5.66 billion. Its stock gained 11.2 percent to close at $23.05 Friday.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
