retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 9, 2009

    The Los Angeles Times reports that Ron Burkle’s Yucaipa Cos. investment group has acquired a seven percent stake in Whole Foods, saying that the company was being undervalued in the stock market and "that there are substantial opportunities for the company to improve operations and its pricing image while maintaining its high-quality product offering."

    Whole Foods is the second big retailer in a week to find that Burkle suddenly was a significant shareholder. Last week, he acquired 8.3 percent of Barnes & Noble.

    Burkle said in his filing with the US Securities and Exchange Commission (SEC) that he would "closely monitor the company's performance,” though for the moment he plans to just be an investor. That could change, he said, depending on other developments and opportunities.

    could modify his plans depending on his investment company's evaluation of Whole Foods' "business prospects and financial position, other developments" and "opportunities."

    As the Times reports, “Burkle built his fortune, which before the recent financial markets meltdown was estimated to be about $3 billion, buying and selling supermarket chains such as Ralphs, Alpha Beta, Fred Meyer Inc. and Food4Less.”

    Whole Foods has its hands full these days. While it deals with declining revenues related to the recession, it also is waging war against the Federal Trade Commission (FTC), which continues to try to unravel its $565 million acquisition of Wild Oats, which was concluded more than a year ago.

    KC's View:
    Somehow, it doesn’t seem likely that Burkle is going to remain a passive investor in Whole Foods – that just isn’t his pattern. It is all a question of whether this is a long-term or short-term play…and when he deems it appropriate to make his move.

    Published on: January 9, 2009

    • In an announcement that surprised many retail experts, Walmart said yesterday that its December same-store sales were up just 1.7 percent, despite the fact that expectations were that Walmart would have a relatively strong month because of cash-strapped consumers looking for bargains and discounts.

    Wal-Mart said that December same-store sales rose 1.9 percent at its namesake stores and only 0.1 percent at its Sam's Club units.

    • Target Corp. reports that its December sales rose 0.2% to $9.3 billion, on same-store sales that were down 4.1 percent. The same-store sales number was not good, but not as bad as was expected by analysts, who believed it would be more than twice that.

    • The Great Atlantic & Pacific Tea Co. (A&P) reported a third quarter loss of $13.6 million, compared to a $57.3 million profit during the same period a year ago. (The year-ago profit numbers included the sale of its Metro chain of stores.) Q3 sales were up 70 percent to $2.12 billion, from $1.25 billion in the prior year, on same-store sales that were up 1.9 percent for A&P stores and down 0.5 percent for Pathmark supermarkets.

    • PriceSmart, which operates membership club stores in the Caribbean and Central America, announced that its first quarter sales increased 21.8 percent to $298.5 million from $245.2 million in the first quarter of fiscal year 2008. Total revenue for the first quarter was $305.2 million compared to $250.4 million in the prior year. Same-store sales were up 14.1 percent.

    Net income was $10.7 million in the first quarter of fiscal 2009 compared to $6.7 million in the first quarter of fiscal 2008.

    KC's View:
    When things don't even go well for Walmart, you know you are in a recession. This just demonstrates how fragile the whole construct is right now…

    Published on: January 9, 2009

    Interesting piece in Advertising Age about a new study conducted by Revelation Research into how people go through checkout lanes with their shopping carts.

    It seems that 74 percent of all customers – men and women alike – pull their carts through checkout lanes, as opposed to pushing them through. This is interesting, Revelation Research suggests, because most front end lanes are designed to market products to people who are pushing their carts…meaning that all sorts of sales and marketing opportunities are being missed in almost three-quarters of all cases.

    KC's View:
    Go figure.

    For the record – and I’ve never thought about this before – I am a puller. And I can’t remember the last time I made an impulse purchase while going through the checkout lane.

    Coincidence?

    I would’ve thought so until now.

    Published on: January 9, 2009

    Crain’s Chicago Business reports that drugstore chain Walgreen plans to eliminate 1,000 corporate and field management jobs, or about nine percent of its management workforce.

    According to Crain’s, “The job cuts, which won’t include store employees, are part of the company’s plan to attain $1 billion in savings for the fiscal year 2011 … The cuts will be achieved through a combination of early retirement and a severance program. The company didn’t estimate the cost of the job cuts, which will be completed by the end of the company’s fiscal year on Aug. 31.”

    Walgreen currently operates more than 6,600 stores in 49 states and has a total of 237,000 employees.

    KC's View:

    Published on: January 9, 2009

    The Wall Street Journal reports that almost 400 people in 42 states have been sickened by a single strain of salmonella since mid-October. Eighteen prevent of the total have been hospitalized.

    However, while health officials know what is making the people sick, they have no idea how each of the people contracted salmonella.

    KC's View:

    Published on: January 9, 2009

    • Steve Junqueiro, the COO of Save Mart Supermarkets, has been given the additional title of president of the company by chairman/CEO Bob Piccinini.

    Junqueiro is a 35-year employee of the company who started out as a produce clerk.

    • Unified Grocers announced that Christine Neal has been named the company’s Senior Vice President of Finance and Treasurer. Neal, who previously worked for both Gelson’s and the California Restaurant Association, has served as Treasurer at unified since joining the company in 2003.

    KC's View:

    Published on: January 9, 2009

    In the BCS championship game, the University of Florida Gators defeated the University of Oklahoma Sooners 24-14.
    KC's View:

    Published on: January 9, 2009

    …will return.
    KC's View:

    Published on: January 9, 2009

    We spend a lot of time here on MNB talking about the value of the family dinner, that kids who eat supper regularly with their families tend to get better grades, be better adjusted, avoid drug and alcohol problems, and even have fewer obesity issues.

    Well, there was a piece on Slate the other day noting that family dinners are good for parents, too:

    “The research by lead author Jenet Jacob of Brigham Young University found that among 1,580 parents who worked at IBM, those who said their jobs interfered less with being home for dinner tended to feel greater personal success, and success in relationships with their spouses and their children. The working parents—both mothers and fathers—had all of these buoyant feelings if they made it home for dinner more regularly, even if they still worked long hours. They also felt more kindly toward their workplace. Parents who missed dinner at home because of work, on the other hand, felt gloomy about their professional futures.”

    The one downside of this study seems to be that women seem to get more out of family dinners than men…but that may be because they a) take more responsibility for bringing the family together for a meal, and b) allow themselves to focus on the occasion rather than be distracted.

    Which only proves, yet again, that women generally are smarter than men.




    Great comment from CNBC’s Dylan Rattigan, appearing yesterday morning on “Morning Joe” on MSNBC. He suggested that people who are concerned about over-regulation in the wake of the recession and economic hard times should actually push for complete transparency at all levels of the system, that regulations aren’t needed when completely transparency is required.

    That strikes me as an attitude that in some ways cuts across the regulatory universe. Regulation isn’t as necessary when transparency is the rule rather than the exception.

    The thing is, people can't have it both ways. You can’t have deregulation and lack of transparency.

    Recent events seem to have proven that.




    There was a story in the Boston Globe the other day noting that “at least 10 cities and towns and thousands of Massachusetts consumers are paying more than $2 a gallon above market rate for their heating oil this winter after locking into prices that seemed like a bargain only a few months ago.

    “Experts were predicting last summer that rates could rise as high as $5 a gallon and thousands of panicked customers, including some local governments, signed on to a fixed rate - then watched the price of oil plummet as much as 50 percent. They are now discovering that terminating or renegotiating their contracts will be costly, if it is even possible.”

    The general feeling seems to be that people should be able to get out of contracts that now seem unreasonable.

    Which I don't really understand. A contract is, after all, a contract. And my understanding is that oil companies went out and bought oil before the price drop based on the number of people who signed fixed rate deals…and, by the way, it could have as easily gone the other way, and it is unlikely that these towns and citizens would have let the oil companies out of their contracts.

    I have some experience with this, by the way. I’m one of those people who locked in a fixed rate, and now is paying way above the market for heating oil. (Mrs. Content Guy maintains, with some degree of accuracy, that this was more my idea than hers.)

    But it never occurred to me to try to get out of the contract. I signed the paper. Maybe next year, it will go my way.




    Got an email the other day from an MNB user referring me to predictions by some guy named Gerald Celente, CEO of some organization called the Trends Research Institute, who is predicting that “by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts,” according to a Fox News story.

    Celente goes on, “It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.

    “We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people’s minds weren’t wrecked on all these modern drugs – over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.”

    Methinks that this guy has seen “Escape From New York” too many times.

    Listen, I know things aren’t looking real rosy at the moment. But are we heading down the road toward anarchy and third world status?

    I can't believe that. I refuse to believe that.

    On the other hand, a prediction that we’re going to survive the economic downturn might not get as much publicity as doomsaying.

    Tell you one thing, though. I’m thinking it is time for a new Snake Plissken movie.




    Good culinary news from the Newark Star Ledger:

    “Gone are the guilty excesses of the past decade; fancy multi-course tasting dinners on the town; highly sought after cult wines and culinary must haves like rare white truffles unearthed from faraway hills in Tuscany or Japanese bred dry-aged Kobe beef.

    “These days it's more about comfort and good value; sitting around the kitchen table with family and friends savoring steamy bowls of thick-as-fog pea soup, a loaf of crusty bread and a bottle of bargain bin vintage.”

    Sounds like heaven to me.

    That said, I have to admit to having enjoyed a particularly wonderful and ever-so-slightly excessive dinner on New Year’s Eve…a black fettuccine made with squid ink served with chilies and chunks of lobster. It may have been one of the best pasta dishes I’ve ever eaten, and we enjoyed it at the new Port Chester-New York restaurant opened by Mario Batali and Joe Bastianich, the Tarry Lodge.

    This is a terrific restaurant that serves wonderful Italian food that is not too expensive, and has a great wine list and wonderfully helpful staff. It’s gone immediately to my list of favorites…in pat because you have a nice meal there, or can simply stop by the bar after a movie for a plate of pasta and a glass or two of red wine.

    Again, it’s my idea of heaven.




    BTW, I had a chance to sample some new bottled pasta sauces from Batali that are being introduced into the marketplace, and they are excellent – they have a bit of an edge to them that make you think that they weren’t developed using lowest-common-denominator thinking.

    Which is high praise in my book.




    I also have a wonderful wine for you to try – the 2005 Chateau Saint-Nicolas, a wine from France that is thick and smooth and just about perfect…40 percent Merlot, 40 percent Cabernet Sauvignon, and 20 percent Cabernet Franc. Yummmm!




    As for movies, I loved “Frost/Nixon,” and liked “Valkyrie” more than I expected to. In both cases, the audience knows how it all turned out (Nixon never rehabilitated his reputation, Hitler wasn't assassinated) but the movies make getting there all the fun.




    That’s it for this week.

    Have a great weekend, and I’ll see you Monday.

    Sláinte!!

    KC's View:

    Published on: January 9, 2009

    The Poughkeepsie Journalreports that the American Beverage Association (ABA) “is forming a coalition of business, labor unions and community advocates against the so-called ‘obesity tax’” proposed by New York Gov. David Paterson. The Journal writes, “Besides non-diet sodas, sweetened iced teas and other soft drinks, it would be assessed on fruit drinks with less than 70 percent natural juice. The ‘obesity tax’ is one of 134 new or expanded taxes and fees that the governor is proposing to help bring the state out of a fiscal crisis. It faces a budget deficit of more than $15 billion.

    Susan Neely, President and CEO of the American Beverage Association, said in a prepared statement, “While Gov. Paterson laments job losses across the Empire State, his tax hike on beverages will raise costs and threaten thousands of good-paying jobs with health benefits all over New York. New York-based employers will be at a tremendous disadvantage with their counterparts in neighboring states. A significant percentage of sales will simply be lost, as New York consumers cross the border to buy their beverages -- and other groceries, clothes, and consumer goods -- in other states.

    “The proposed sales tax on beverages to fight obesity is simply a facade for raising taxes. It's a pure money grab from hardworking families who have no more money left to give. Singling out one particular product for taxation won't even make a dent in a problem as complex as obesity. If we are serious about combating obesity we need to comprehensively address the consumption of all foods and beverages and get more physically active as a society. It's unfortunate that some are perpetuating the myth that taxing one product will make a difference in obesity. It won't.”

    KC's View:
    As the Journal points out, the tax on sugared beverages doesn’t exist in a vacuum; it is “one piece of Paterson’s five-point obesity-prevention plan, which also includes banning trans fats from restaurants and junk food from schools, requiring menus with nutrition and calorie information at chain restaurants, and encouraging the development of full-service supermarkets in low-income areas.”

    The thing is, these are noble sentiments for the most part. And certainly New York – like pretty much every other government, big and small, in the US – is in desperate need of new revenue.

    But I think I agree with the ABA on this one, insofar as the tax seems pretty random. On the other hand, the state probably has to raise taxes somewhere…and no matter where taxes get raised, someone is going to complain. So I’m not sure that the ABA will win this one.

    Published on: January 9, 2009

    The Minneapolis / St. Paul Business Journal reports that Red Brick Health, which specializes in preventative health care services – such as health assessment and screening tools and health coaching programs - has signed a deal with Hannaford Bros. to expand its services from 2,400 people to 18,000 eligible employees.

    According to the story, “RedBrick Health also is providing health-plan selection support to all 14,000 Hannaford associates eligible for the company’s health plans this coming year. Financial terms of the deal were not disclosed.”

    KC's View:
    Smart move. We approve.