Former Jewel Companies, American Stores, and Albertsons real estate executive Bill Harbecke attended our May 2nd Chicagoland luncheon and provided attendees with background related to the recent sale of parts of Supervalu.
Bill is a principal with the firm of Klaff Realty LP, who, along with Cerberus Capital Management and three other partners, purchased Jewel-Osco, Acme, Shaw’s/Star Market from Supervalu. Klaff Realty LP and Cerberus were the same group that acquired 699 grocery store properties from Albertsons in 2006. While many of those acquired stores have been closed or sold, Albertsons LLC, as it called, has continued to profitably operate the remaining 200 stores. It can be argued that they were more successful with their acquisition than Supervalu was with the stores acquired from the 2006 break-up of the original Albertsons.
Bill indicated that Klaff Realty LP’s recent purchase should not be viewed as a strategy to sell off the pieces of the chains. Although Jewel-Osco’s has gone from 43% market share to 34%, it still represents a lot of business in a major market - Chicago. The new Jewel-Osco management consists primarily of former Albertson veterans who have had success in turning businesses around. On a related topic, Jewel Retiree Club president Dave Stailey indicated that for now, the Supervalu 401k plan (State Street) is still in effect. for those Osco retirees who are in the plan. Post break-up, Supervalu’s is on track for annual sales of $17 billion. Their wholesaler business consists of 2,000+ stores, 1,300 of which are Save-A-Lot grocery store franchises. In the transaction, the acquisition ended up with a sizeable number of Supervalu shares, and felt it was a good investment. SVU’s stock reached a 52 week high of $7.10 on May 15th.