Albertsons files for IPO, touts fresh as key strength
Albertsons has filed documents with the Securities and Exchange Commission to launch an initial public offering.
The number of shares to be offered and the price range for the offering have not been determined, according to a news release.
Albertsons owns banners including Safeway, Jewel-Osco, Vons, Acme, Star Market, United Supermarkets, Pavilions, Tom Thumb and others, with 2,260 stores across 34 states. The S-1 filing states that the retailer enjoys the highest market share or second-highest market share in two-thirds of the 121 metropolitan statistical areas in which it operates.
In its filing, Albertsons repeatedly heralds its fresh departments as significant drivers of the business.
“We have particular strength in fresh categories including produce, meat and seafood, bakery, prepared foods, deli and floral,” Albertsons wrote. “Fresh sales accounted for over 41% of our revenue in the first three quarters of fiscal 2019, which we believe is one of the highest percentages in the industry. Our relationships with a select group of suppliers enable us to provide exciting fresh produce, giving us access to premium produce grades in terms of size, flavor, color and quality.”
Since Albertsons acquired Safeway in 2015, the company has invested about $6.8 billion in capital expenditures, including $1.5 billion earmarked for the 2019 fiscal year.
“Approximately $3.8 billion of that spend contributed to completing 950 store remodels and opening 57 new stores, as well as merchandising and maintenance initiatives,” Albertsons wrote in the filing. “We have also increased investment in digital and technology projects, including an estimated $375 million we intend to spend in fiscal 2019. These investments include upgraded pricing and promotional tools and more integrated and easy-to-use customer-facing digital applications.”
When it comes to spending on stores, the retailer has focused on improving the in-store experience, according to the S-1.
“We have simplified our merchandising programs, automated our front-end scheduling processes and expanded self-checkout in 435 additional stores during the first three quarters of fiscal 2019,” Albertsons wrote in the filing. “These enhancements have been instrumental in improving store-level productivity, allowing us to increase our focus on the customer.
“To further enhance the customer experience, we remerchandised over 700 stores since the beginning of fiscal 2017, reallocating space to better accentuate high growth fresh categories like produce, meat and seafood, bakery, prepared foods, deli and floral,” Albertsons wrote. “This, coupled with our robust remodel program, has also allowed us to optimize store layouts and ease shopping patterns to make things simpler for customers and employees.”
The company also listed as significant its online grocery service, including curbside pickup at 550 locations and home delivery service from 2,000 stores. Albertsons also describes as a significant advantage its capacity to deliver personalized pricing and unique digital communications to shoppers.
“Our just for U program drives basket size by delivering almost 400 million personalized promotional deals each week through a variety of digital channels; our data indicates an engaged just for U household spends approximately four times more than shoppers not participating in the program,” Albertsons wrote. “We have grown household membership to nearly 20 million registered households during the third quarter of fiscal 2019, an increase of 25% compared to the third quarter of fiscal 2018. Our data also indicates that as our customers start engaging in e-commerce, they increase their spend with us by an average of 28%.”
The company has seen positive same store sales growth in each of the last eight quarters, per the filing. Albertsons’ net sales in 2018 were $60.5 billion.
