retail news in context, analysis with attitude

As promised, the emails about Supervalu...

One MNB user wrote:

I've been reading the column daily and occasionally contributing for 10 years.  I am a middle manager at SVU but I don't speak for the company.

It seems you have really been rooting for Supervalu to fail.  I'm sure it's juicy content but I really don't think you're treating the story fairly.  I'm not saying everything has been totally off base but it certainly slants toward the negative.  Morning News Beat, the TMZ of grocery!  It's always more fun to talk about the train wreck than the train that ran on time.

Anyway, I'd ask you to check your facts on one comment you made today.  Maybe I'm the one confused here, but I don't believe Craig Herkert had received one of the retention bonuses.  He was granted some restricted stock options in lieu of bonus but no cash to stay the way I read/understood it.

Also, regarding the retention bonuses that were granted, maybe now we see the rest of the story.  The board may have granted them because they knew what they were going to do with Craig and cannot afford a complete turnover.  IMHO, the 4 who got them were not the ones who caused the problems as you and others have suggested.  Janel Haugarth, for example is highly regarded by many and I suspect could emerge as CEO when the new "hatchet man" is gone (after a major downsizing/refocusing on wholesale and maybe Save-A-Lot).  The problem at SVU was created by Jeff Noddle and Craig inherited it.  Granted, he didn't move appropriately to fix it and got what he deserved.  If you really want to know what caused the whole mess it was buying a failing company in Albertsons and then allowing the Albertsons people to run the whole business.  I won't name names but I could.  There's probably 6 people, some of whom are still there, who thought they knew it all because that's "how we did it at Albertsons".  The road to this mess started in Boise.

MNB user Ken Fobes wrote:

While it may be a "day late and a dollar short" for Supervalu, if anyone can turn the company around it is Wayne Sales.  I had the privilege of helping Canadian Tire develop a retail support strategy during Mr. Sales tenure as CEO.  The initiatives taken at Canadian Tire, under his leadership, were successful in keeping Canadian Tire one of the most successful retailers in North America.  I wish him well as he takes on this daunting assignment.

From another reader:

First, a thank you for your sharply honed commentaries on the continuing flow of events that has catapulted SVU to the top of the Twin Cities’ list of dysfunctional retailer regimes, leaving the Best Buy leadership fiascos at least temporarily forgotten.

As somewhat of a punster I couldn’t help but notice a pun that was created as the result of a ‘typo’ in your BREAKING NEWS ALERT:  CEO Herkert Fired by Supervalu.

You noted Craig Herkert…has been fired, effective immediately.  He will be replaced for the time being by Wayne Sales, the Supervalu chairman, who will now take on the additional titles of president/CEO. The change comes after a tumultuous few weeks for Supervalu, highlighted by underwhelming quarterly sales and profit numbers, the announcement that all or part of the company was for sales..

I assume you meant that all or part of the company was for sale, or was it that all or part of the company was for Sales?  I assume the former though the latter makes for an appropriate play on words.

I do give you credit on questioning whether ‘the ironically named Sales is the answer’ and insightfully noting the often overlooked responsibilities and culpability of corporate boards in overseeing the successful moves of executives as well as failed policies.  When a company’s leadership is embarrassing itself we expect the governing board to check and if necessary correct aberrant behavior.  Here the board went along with policies that crippled employee morale and made the company a laughing stock in the eyes of many, including investors.

I eagerly anticipate that the Herkert firing portends a rapid changing of the guard and one that requires a lot less time than neighbor Best Buy seems to require to find a new CEO.

The pun was an accident. I was writing fast and I goofed.

Another MNB user chimed in:

Instead of earnings trajectories, how about, "Folks I need your help to get this train wreck back on track... and here's my e-mail address and here's my phone number."?

That would have been refreshing.

Another MNB user wrote:

In your comments about the firing of Craig Herkert and the new role of Wayne Sales, you state that Wayne’s first order of business should be to bring back free coffee and plastic utensils. As a current employee of the company, I would prefer we save a job or two by spending that money on our employees instead of giving everyone the free incidentals. Saving money is saving money. If we save it on the unimportant things that result in keeping a couple of employees in their jobs, I say that’s what we do. By the way, I don’t drink coffee so I’m not used to getting my free doses of daily caffeine – I have to pay for it in the vending machines. I also believe that those at the top need to start relinquishing their perks.

That is an absolutely legitimate point. I agree that hiring people back is more important than free coffee. But I also think that morale is, to be blunt, in the crapper. Symbols count ... and this might have been a good one to send.

From yet another reader:

Interesting that he was fired so quickly after receiving the bonus and I doubt highly that it was because of his comments - although ridiculous, short sighted, callous, etc. probably not grounds for termination. I wonder if it has to do with the Walmart suit or some gross misconduct because he has basically run SVU into the ground and they didn't fire him for that…they gave him a retention bonus…after all, someone has to throw dirt on the casket…

No evidence that I've seen that the Walmart situation that Herkert's implication by the New York Times in the Mexico bribery scandal had any impact on his Supervalu tenure.

Another reader wrote:

I know many good people, at Supervalu, that have endured the lack of leadership, direction, focus – operationally & merchandising, and the utter distain for front end employees, from leadership, in this organization since Herkert was hired.  This organization has one leg in the ground and other firmly planted in quicksand.

Still another MNB user wrote:

Either the board couldn't handle the negative press or a sales is pending and he was in the way? Or maybe Both! Just a thought.

Wishful thinking, I expect.

And from another MNB reader:

A lot of speculation that this was to slow down the bleeding and that he is keeping seat warm, as you say. Leading candidate on the rumor mill is Peter Lynch.

We'll see. I take Supervalu at its word - that it sees Sales as the long-term answer. Now he has to deliver.

On an entirely different subject, I laughed out loud at this email from an MNB user who wrote in about yesterday's story about how Jeff Bezos gave $2.5 million to support a Washington State ballot initiative legalizing same-sex marriage, and how there apparently are a number of wealthy Republicans who also support gay marriage.

These folks are all Republicans?

What’s next…conciliatory & open dialogue about other important issues such as gun control, tax reform, etc.?

I don't think either side is particularly open to such dialogue. Pandering to your base is so much easier.

The other problem is that a lot of these folks then get defined as RINOs. Which sort of reduces the likelihood of civil discussion and compromise.
KC's View: