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SuperValu Responds to Pressure from Activist Investor, Outlines Plans for Growth

SuperValu Responds to Pressure from Activist Investor, Outlines Plans for Growth


MINNEAPOLIS, MN
Wednesday, February 7th, 2018

A recent report by The Wall Street Journal suggests that one of the nation’s largest grocery retailers may be headed into uncertain territory—with activist investors looking to gain control of SuperValu’s board, urging a breakup of wholesale and retail divisions, and potentially eyeing a sales.

According to the news source, Blackwells Capital LLC, an investment group that owns approximately 4.35 percent of SuperValu’s stock, privately approached the retailer’s board of trustees, asked that Blackwells be given three seats on the board, and detailed plans to form a committee to review potentially separating Supervalu’s retail and wholesale divisions in preparation for the sale of the company’s wholesale business. The board rejected the request, instead issuing an outline of its strategic goals moving forward.

SuperValu Storefront

“Discussions encompassed a variety of topics pertaining to the business and the Company’s ongoing initiatives as well as our Board refreshment efforts—initiatives that have been underway substantially since before Blackwells became a stockholder,” SuperValu noted in its statement. “Despite our efforts to reach a constructive path forward and to discuss overlapping objectives, Blackwells has decided to threaten an unnecessary and counterproductive proxy contest.”

The retailer also highlighted the various ways in which the company has been growing its wholesale operations, noting: “SuperValu has been rapidly and strategically transforming its business to become a wholesale company focused on the distribution of consumable products across the United States. Sales from SuperValu’s wholesale operations are now approximately 75 percent of its total annual sales, up from approximately 44 percent only two years ago.”

SuperValu's wholesale operations now make up approximately 75 percent of the company's total annual sales

Highlighted initiatives and strides the company has taken to strengthen its business include:

  • Adding more than $5 billion in run rate sales to bring the company’s core wholesale business to reach nearly $13 billion, including the addition of significant new wholesale customers such as The Fresh Market and the acquisition of two strategic wholesale companies of Unified Grocers and Associated Grocers of Florida this fiscal year
  • Bringing in new leadership in Wholesale to drive operational improvements and ensure smooth integrations of acquired businesses
  • Bringing in new leadership in Retail to make fundamental changes to this business and to better align retail initiatives with wholesale operations
  • Completing the sale of the company’s Save-A-Lot banner for $1.3 billion, significantly reducing SuperValu’s debt, improving the company’s balance sheet, and creating the flexibility to pursue its growth strategy
  • Continuing initiatives for sales and closures of select retail assets, monetization of real estate through sale leaseback transactions, and cost reductions.

Will activist investors be satiated by SuperValu’s renewed focus, or will they continue to make efforts to push for a sale? Deli Market News will continue to report with updates.

SuperValu
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SUPERVALU is a grocery industry leader, serving customers through over 3,400 owned, licensed, franchised and affiliated stores across the country. Our roots are in supply and wholesale distribution...

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