retail news in context, analysis with attitude

In Minnesota, the Star Tribune reports on the possibility that Supervalu, having finally sold off its Save-A-Lot business for $1.37 billion, could now decide to unload its five other retail businesses.

"On the one hand," the story says, "Cub and the rest of Supervalu’s conventional supermarkets have long been fighting a losing market-share battle, so the company could dump them if the price was right. On the other, Cub and its brethren are important outlets for Supervalu’s wholesale grocery business.

"Whatever the outcome, Supervalu’s once-mighty retail presence — it was the third largest U.S. supermarket operator just four years ago — is down to about 200 stores, the largest collection of which is in Minnesota. There are more than 80 Cub outlets, including 30 franchised locations, mostly in the Twin Cities."

The story notes that most of Supervalu's retail holdings, if sold, probably would be sold at a relatively low price because "none of Supervalu’s chains in Baltimore, Washington, D.C., St. Louis or Virginia lead the market." In the Twin Cities, however, "Cub is the market leader, despite ceding share." And, one analyst suggests that Supervalu's likely insistence that any buyer sign a supply chain agreement with its wholesale division also could serve as an impediment.
KC's View:
I suspect that in the end, it will be all about price. The right number will get Supervalu's top execs to pay attention.

Also, I could be wrong about this, but it seems far more likely that separate deals will be made for the various components. Hard to imagine one company coming in to buy the whole thing.