retail news in context, analysis with attitude

…with brief, occasional, italicized and sometimes gratuitous commentary…

• The Wall Street Journal has a story about how brokerage/marketing service company Acosta - owned by private equity firm Carlyle Group - has hired a law firm "to advise on talks to restructure some $2.7 billion in debt as the struggling marketing-services company faces a looming interest payment." The company is said to have "notified its lenders and bondholders they should sign nondisclosure agreements to enter into formal restructuring negotiations in advance of an expected credit default."

In a statement, Acosta said that its "objective is to strengthen Acosta for the future and ensure we remain the most competitive sales and marketing agency in the industry for our clients, customers and employees. There will be no disruption to our business as we continue to work with our lenders."

The story makes the point that Acosta has been hit on two fronts. Business has been hurt by major companies, such as Kraft Heinz and Clorox, that has stopped using its services, as well as by the move by consumers toward fresh foods and away from the packaged food categories that have made up the bulk of its volume. What is hard for me to understand - and I'm happy to be educated on this - is what fundamental changes will Acosta (and other brokerage/marketing services companies) make to address these changes in the marketplace. There may be "no disruption to our business" in the short term, but are we seeing major surgery here, or just a band-aid? And what does Acosta really need

• The Wall Street Journal writes that a new deal finalized between the US Commerce Department and Mexican tomato growers will require the US Department of Agriculture (USDA) "to inspect round and Roma tomatoes and bulk grape tomatoes," with inspectors normally arriving and completing their work "within 24 hours."

The problem importers say, is that "any delays in transporting their product - which normally moves from Mexican greenhouses to stores across the U.S. in seven days - would bring risks of spoilage, higher costs or a requirement to pick the tomatoes earlier."

The Journal writes that "the deal is part of a long-running trade battle that pits mainly Florida-based tomato growers against producers of Mexican tomatoes. The Florida Tomato Exchange in 2018 requested that the Commerce Department terminate a prior agreement that had previously resolved longstanding accusations of dumping tomatoes at unfairly low prices in the U.S.

"Retailers are worried the inspections in the new deal will lead to bottlenecks at the border."

Just another example, it sounds like, of how trade wars may not be in businesses' and consumers' best interests.

• The Press-Enterprise reports that "Pharmacists at Southern California’s major supermarkets and workers at 172 Stater Bros. stores have reached separate agreements on new union contracts.

"The tentative contract for pharmacists at Albertsons, Vons and Ralphs was announced Tuesday, Sept. 17 on the website of United Food and Commercial Workers’ Local 1167, which represents Inland Empire workers. The contract with Stater Bros. employees was posted Wednesday.

"Both contracts must be ratified by the union’s rank and file. Stater Bros. workers will vote Sept. 30."

• The Houston Business Journal reports that H-E-B has gotten the permits necessary to "clear the way for the construction of a 99,831-square-foot, hi-pile warehouse addition and/or remodel" at its Houston distribution center. "The permit lists the estimated cost of the construction at $12.5 million."

According to the story, "the construction at the distribution center at 4625 Windfern Road comes as H-E-B nears completion of a 64,000-square-foot snack manufacturing plant about a half mile away. Located in northwest Houston at 10000 1/2 Genard Road, the snack plant will be H-E-B’s second such facility in Texas. The existing one in San Antonio manufactures potato, corn and tortilla chips 24 hours a day in a 40,000-square-foot space."
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