For the second consecutive period, six of the largest retailers doing business in the Mid-Atlantic – Ahold Delhaize USA, Albertsons, Amazon, Weis Markets, Publix and Costco – all of which reported financial results during the past three weeks, achieved strong quarterly performances as consumers continued to purchase retail food at near record levels.
At Ahold Delhaize USA, which includes Giant Food, The Giant Company, Stop & Shop, Food Lion and Hannaford, comparable store sales increased 20.6 percent in the company’s second quarter ended July 26.
“The engagement and strong execution of our teams have translated this unprecedented demand in both the U.S. and Europe, due to COVID-19, into outstanding results. These developments, along with the benefit of comparing against the same quarter last year, when we saw a negative impact from the strike at the Stop & Shop brand in the U.S., have led to strong underlying operating margin performance in the quarter,” said CEO Frans Muller.
Ahold also noted that it made significant investment in safety with enhanced associate compensation and benefits as well as charitable donations. The Dutch retailer said that those extra expenses totaled $209 million in Q2. Additionally, the international retailer said it hired 45,000 new associates across its network in its second quarters. Globally, Ahold Delhaize saw its online sales jump 77.6 percent during the 13-week period. Muller stated that his company is expected to reach $8.3 billion in online sales by the end of 2020, which would be one year ahead of its original projection.
At Albertsons, which became a publicly-traded entity at the end of June, first quarter sales and profits were also stellar. The Boise, ID-based merchant, which owns Acme Markets and Safeway, achieved an identical store sales increase of 26.5 percent for the 16-week period ended June 20. Additionally, the second largest pure-play food retailer in the country earned $586 million and saw its digital revenue jump 276 percent over the corresponding period last year.
Albertsons said it spent more than $275 million on COVID-19-related investments including appreciation pay to front-line associates, and an additional $53 million contribution to hunger relief and other investments related to supporting and protecting associates and customers. In addition, Albertsons noted it incurred incremental expenses related to the civil disruption in certain of its markets in late May and June.
“I am inspired by the many ways my colleagues continue to step up to serve our customers and help our communities around the country during this time of need,” said Vivek Sankaran, Albertsons CEO. “Their hard work and dedication have also allowed us to successfully navigate this extraordinary environment and we have accelerated our digital and eCommerce strategy to adapt to market conditions. We generated strong financial performance in the first quarter, including robust cash flow and enhanced liquidity, which support our continued investment to benefit our associates, customers, communities and stockholders.”
At Amazon, second quarter sales and earnings also skyrocketed. For the period ended June 30, earnings doubled to $5.2 billion and overall revenue rose 40 percent to $88.9 billion. In grocery alone, the Seattle-based juggernaut tripled its online food sales and increased grocery delivery capacity by more than 160 percent year-over-year. Moreover, it increased the number of pickup locations.
However, sales at its physical stores which include about 500 Whole Foods Markets decreased 13 percent (excluding online orders). Amazon attributed the revenue decline to less traffic in its stores during the pandemic.
In a conference call with financial analysts on July 30, CFO Brian Olsavsky said: “Amazon’s second quarter was another highly unusual quarter. As I mentioned on our last earnings call, we began to see a significant increase in customer demand beginning in early March, and demand remained elevated throughout Q2. Strong early demand in groceries and consumable products continued into Q2, while demand increased during the quarter in our other major product categories like hardlines and softlines. At the same time, we continued to focus on stepped-up employee safety, particularly in our fulfillment and logistics operations, to help ensure the safety and well-being of our employees and partners.”
During the 13-week period, Amazon said it spent more than $4 billion on incremental COVID-19-related costs.
At Sunbury, PA-based Weis Markets, second quarter sales and earnings were also robust. The closely-held regional chain reported that its sales increased 23.7 percent to $1.1 billion during the thirteen-week period ended June 27, 2020, compared to the same period in 2019, while second quarter comparable store sales increased 24.1 percent.
Weis’ second quarter net income increased 102.5 percent to $41.5 million compared to $20.5 million in 2019, while earnings per share totaled $1.54 compared to $0.76 per share for the same period in 2019. Ecommerce sales increased 243 percent during the same period.
“The coronavirus pandemic has altered most aspects of daily life in our seven-state market area which was impacted by full and partial shutdowns initially, and cautious reopenings in June,” said Weis Markets chairman and CEO Jonathan Weis. “This has resulted in customers taking an increased number of meals at home, which shifted food service demand to food retail.
“Our dedicated associates helped us adjust to these new market conditions with accelerated replenishment schedules, strategic procurement and an ongoing commitment to ensuring a safe shopping environment. Their essential work makes this possible. We remain grateful for all that they do,” said Weis.
For the 26-week period ending June 27, 2020, Weis’ sales increased 18.1 percent to $2.1 billion compared to the same period in 2019 while comparable store sales increased 18.5 percent. Year-to-date (YTD) net income increased 96.0 percent to $68.2 million while earnings per share for the same period increased $1.24 to $2.53 per share. YTD ecommerce sales increased 141 percent.
Publix, the nation’s most profitable supermarket chain, continued to record strong sales and profits, much of it due to increased grocery spending during the pandemic. Overall sales for the three months ended June 27, 2020 were $11.4 billion, a 21.8 percent increase from $9.3 billion in 2019. Comparable store sales for the period increased 19.9 percent. The Lakeland, FL-based merchant estimates its sales for period increased approximately $1.5 billion or 16.1 percent due to the impact of the coronavirus pandemic.
Net earnings for the period were $1.4 billion, compared to $661.1 million in 2019, an increase of 106.8 percent.
Publix’s sales for the six-month period ended June 27, were $22.6 billion, an 18.9 percent increase from $19 billion in 2019. Comparable store sales for the six-month period increased 17.1 percent. The company estimates its sales for the same period increased approximately $2.5 billion or 13.1 percent due to the impact of the coronavirus pandemic.
Net earnings were $2 billion, compared to $1.6 billion in 2019, an increase of 23.9 percent.
Effective August 1, 2020, Publix’s stock price increased from $50.10 per share to $54.35 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors.
“Our associates’ efforts to serve our customers and communities have been remarkable,” said Publix CEO Todd Jones. “I want to thank our associates for the comfort they bring to our customers and their fellow associates during this difficult time. It is heartwarming to see how much they care.”
Costco, the nation’s largest club store retailer, kept in line with the retail trend during the month of July. The Issaquah, WA-based merchant posted an overall sales increase of 14.1 percent to $13.04 billion while same store U.S. sales improved by 15.8 percent excluding fuel. Additionally, customer traffic in its physical store grew by 4.5 percent, the largest gain since the pandemic began in March. And Costco’s e-commerce revenue jumped 75.3 percent for the period ended August 2. The high-volume retailer said its best producing regions in the U.S. were in the Northeast, Southeast and in Texas.
While retail food continues to outpace all other retail sectors, there is still great concern about the toll that COVID-19 continues to wreak on the country, both health-wise and economically.
At presstime, there were more than 5.3 million cases diagnosed in the U.S. (although some epidemiologists said the true infection rate may be 10 times more than reported) and more than 170,000 people have died. Additionally, with the increasing number of infections and deaths spiking (averaging about 1,000 per day over the past month due primarily to outbreaks in Florida, Texas and California), there is genuine concern as to when the U.S. will return to something closer to normal.
Economically, huge concerns remain even among food retailers who fear that if unemployment remains above 10 percent – it was 10.2 percent in July, but that was before the federal government’s $600 per week unemployment benefit and its Payment Protection Program expired – that consumers will be forced to spend less on food.
However, with many restaurants still closed or limited, and schools not yet fully back in in session, food retailers are expected to continue their positive sales trends that began in March – both in their stores and online.
End Of An Era As Snider’s To Be Sold To Streets Market; Dave Snider To Retire
Snider’s Super Foods, a supermarket institution in Silver Spring, MD since 1946, has agreed to sell its high-volume unit on Seminary Road. The prospective buyer is Streets Market and Café, the Washington, DC-based operator of nine food stores and cafes in the Baltimore-Washington market. The deal is expected to close at the end of this month.
The Snider family has been doing business in the Montgomery Hills section of Silver Spring for nearly 75 years and has operated its current 12,700 square foot location off of Georgia Avenue since 1961.
The company was founded by Louis Snider, who originally sold fruits and vegetables door-to-door from a team of horses and wagon in Kansas City, MO. When Louis and his wife Lena (who were both Ukrainian immigrants) moved to Washington, DC in 1922, they opened a small grocery store on Georgia Avenue. Their two children, Jerry (who passed away in 2009) and David, began working there at the ages of 10 and 8, long before child labor laws were enacted.
By 1938, what was then called Snider’s Market had moved to University Boulevard and Colesville Road in Silver Spring. In 1946, a second store opened at Georgia Avenue and Dale Drive in the Montgomery Hills section of the city. At the time, Georgia Avenue was one lane in each direction, not the eight-lane artery it is today. Business thrived at that location and the family bought a nearby piece of land where the current Snider’s Super Foods sits. That store opened in 1961.
Company president David Snider, who along with his brother Jerry, had operated the store as a true neighborhood market, knowing many of their customers on a first-name basis. Snider’s was also considered an innovator, offering many ethnic and specialty products that were once difficult to find in the DC area.
Snider, who recently celebrated his 90th birthday, said he appreciates the support of the local community, noting, “There have been many changes in the grocery business during my tenure -from serving customers behind the counter to full self-service supermarkets and changes in customer tastes from meat (our slogan for many years was ‘Meat That Can’t Be Beat’) to organic offerings and prepared foods. I have enjoyed the business and the industry and believe that Streets Market–with their youth, energy and experience–will be a good steward of Snider’s for the next 75 years.”
Added Alex Xenochristos, Snider’s general manager, “I’ve worked at Snider’s for over 48 years and look forward to a bright future for our store.”
Streets Markets, which was founded in 2014 in the District, has expanded further into the DC metropolitan area and has added a store on Charles Street in Baltimore. The stores focus on fresh and prepared foods featuring many specialty and organic offerings.
In a statement, Streets Market said: “We will keep the name, the staff, the service, the value and all of the other aspects that have made Snider’s great. The broad selection of wines and the most expansive selection of craft beers in Silver Spring will remain. The deli, the New York-style pickles and (to respond to one customer’s concern) rotisserie chicken will remain. And Streets Market will bring more organic and international foods. We are excited about the transition, the future and being part of the community.”
In announcing his retirement, David Snider proclaimed: “Thank you. I will miss the business, the loyal customers and the employees, who have been like family to me. It has been a privilege to be part of the community, and I wish Streets Market and its team much success over the coming years.”
In a beautifully written encomium, Snider’s Super Foods – Locally World Famous, to his father and to the store’s legacy, Steve Snider, now a successful attorney in DC, offered this bit of romantic prose: “…Snider’s stayed the course, still providing fresh, high quality foods, value, service and variety. It continued to give 5 percent of its gross sales to local schools when customers returned their receipts to the store, a practice that started years before social investing was in vogue and continues to this day. Snider’s also continued to be a retail outlet for local bakers, farmers, cooks and craft beer brewers to test their products in a grocery store. Snider’s was among the first to sell Silber’s baked goods from Baltimore, New York Bakery bagels, Hebrew National hot dogs, Utz potato chips, Peter Luger’s steak sauce, Greek Table dinners, Berger cookies, Cava humus and tzatziki, milk and eggs from a local dairy in Frederick, turkeys from the Pennsylvania Amish country, fresh peaches, corn and cantaloupe from the Eastern Shore and Souper Girls soups. It also now boasts one of the widest selections of craft beer and wine in the area. Snider’s hired neighborhood kids to bag groceries – for many, their first jobs. He took pride as these kids moved up the ladder at the store – to become a cashier or stocker. He took greater pride when they ‘graduated’ from Snider’s to attend college, become orthodontists and lawyers, start their own businesses, become officials in federal, state and local governments and more.”
I’m going to miss Dave – he’s one of the last throwbacks to the golden age of food retailing when the owners lived the business 24/7. Men I learned a lifetime of lessons from like Izzy Cohen (Giant Food), Sidney Rabb (Stop & Shop) and Herb Brody (Pathmark). And those whose operations were not nearly as large – such as Pat and Buddy Roche (Roche Bros.), George Zallie (ShopRite), Bernie Green (B. Green & Co.) and Dave – all had many of the same traits, tireless work ethic, an uncanny intuition to make the right decision under pressure and a deep and abiding faith in their associates.
Dave Snider had all those attributes and even today will gladly engage you about the “inside baseball” of the grocery business. Best of luck to you, my friend, and may all your future endeavors bring you joy!
‘Round The Trade
According to several sources, The Fresh Market (TFM), the beleaguered perishables-oriented grocery chain, has 12 of its units up for sale. The Greensboro, NC-based merchant, which is now owned by PE firm Apollo Global Management, is reportedly seeking to unload a dozen underperforming locations, five of which are in the Mid-Atlantic area – Rockville, MD; Vienna, VA; Midlothian, VA; Montvale, NJ; and Smithtown, NY. The other stores on the presumptive selling block are located in Florida (three stores); Alabama (2); Georgia (1); and South Carolina (1). Ever since going public in 2010 (and then returning to being a privately-held company again in 2016 when Apollo acquired a majority stake), TFM has struggled in almost every phase of its game, including questionable expansion decisions, a revolving door of senior management and establishing a differentiated model from other perishables-driven grocers. And current owner Apollo is simply a bad fit for a company that needs intensive support and creativity from its ownership…one of those competitors whose flag is flying in a totally different direction is Sprouts Farmers Markets. That produce-focused operator is doing well by virtually every measure – same store sales, earnings, stock price and customer connection. The Phoenix-based specialty merchant opened its fifth Maryland store last month in the yuppified Canton area of Baltimore City. From my early observations, I think the store will do very well as a late afternoon/evening store as well as on weekends. But then again, in-store shopping patterns during the pandemic are difficult to project. At the ribbon cutting, it was nice to see both senior VP Dan Croce (truly one of the good guys in the business) and his boss, the relatively newly-minted CEO Jack Sinclair, who according to our own Karen Fernandez was a very engaging fellow whose mask and Scottish accent made communications a bit interesting. Stay tuned as we hope to bring you a battle of the brogues between Sinclair and fellow Scotsman Gordon Reid, president of Stop & Shop. BTW, Mr. Sinclair was nattily attired in full “Sproutswear” garb at the opening – shirt, hat and mask.
Store of the month: Safeway’s new 60,000 square foot Capitol Hill unit in DC (14th Street SE), which replaced a smaller store on that site that closed in 2018. This is the nicest Safeway store I’ve ever visited and it features many fresh and specialty offerings including a 500-bottle walk-in wine cellar. The new unit will serve as a neighborhood store, but what a great neighborhood in which to be situated. However, there is some real competition to deal with in the neighborhood, including a 45,000 square foot Harris Teeter (opened in 2008) and a newish 35,000 square foot Whole Foods (opened in 2018). Those two high-end competitors’ stores are located about one-third of a mile and 1.5 miles away from the new Safeway, respectively. And speaking of Whole Foods, the subsidiary of Amazon cut the ribbon on a new District store of its own last month. The long-awaited store on Florida Avenue NE debuted on July 23, marking the sixth Whole Foods Market in Washington.
Trader Joe’s will open its second Richmond store (likely in late 2021 or early 2022) in part of a former Martin’s (Ahold Delhaize USA) grocery store. The new unit will be 14,700 square foot and will be located about 25 miles away from the original Richmond area TJ’s location in Glen Allen, VA. And thumbs up to the Monrovia, CA-based specialty merchant (which still maintains the industry’s highest sales per square foot average) for not caving into pressure to change the name of some its brands including Trader Jose’s, Trader Giotto’s and a few others, some of which have not been used for several years. TJ’s did this the right way – asking its customers and associates if they felt the names were racist. Certainly, in the cases of brands such as Aunt Jemima, Uncle Ben’s and Mrs. Butterworth’s, changes needed to be made. The negative racial overtones seem obvious. But does every brand that utilizes ethnicity as a theme have to be changed? I say resoundingly, no. I’m done writing about this topic because my sensitivity gene is beginning to throb.
Deal of the month: 7-Eleven’s $21 billion cash acquisition of Marathon Petroleum. The deal will add about 4,000 Speedway gas stations in the U.S. and Canada to 7-Eleven’s current roster of about 10,000 locations in North America. This is primarily a fuel deal for Japanese-owned 7-Eleven (parent firm is Seven & i) and will give the largest U.S. c-store player sales of an additional 7.7 billion gallons of gas a year (for the next 15 years).
Roman Heini (gotta love the name) is leaving Lidl after only 17 months as chairman of its U.S. business. Apparently the 6’8” tall German executive, who spent most of his career at rival Aldi, is leaving to “pursue other professional interests” (hmmm, a line I don’t believe I’ve ever heard before). That leaves Johannes Fieber, Lidl’s current U.S. CEO, to be the company’s primary steward for its U.S. stores which now total about 100 units since the company debuted here in 2017.
Baltimore-based Tulkoff’s (I can smell the horseradish from here) announced that it will build a new 60,000 square foot manufacturing plant in Cincinnati that will produce private label items and co-pack other products for its retail and foodservice customers. The new facility should open early next year.
Although food price inflation has been significant since the pandemic began six months ago with an increase of more than 4 percent, prices dropped by 1.1 percent in July, according to the U.S. Department of Labor. While consumers often find price hikes to be difficult to stomach (and comprehend), the most obvious reason for this recent spike is clearly the increased costs and pressure that manufacturers faced in trying to maintain adequate supply chains during the pandemic. Maybe the best explanation came from Xavier Santoro, who listed his occupation as manifesto author, who was recently quoted in the satirical publication The Onion. “I knew they would jack up the price after getting me hooked on eating,” said the deep-thinking writer when asked to comment in the publication’s “American Voices” column.
Acosta has named CPG veteran Brian Wynne as its new CEO, as the shakeup at the big brokerage continues under new the ownership group. Former CEO and veteran Acosta exec Darian Pickett will now become chief executive of the company’s North American sales agency.
Weis will be closing its store in the Fredericksburg, VA Shopping Center next month. This was one of 13 former Food Lion stores in Virginia that the Sunbury, PA gained as part of a 38-store divesture sell-off before the Ahold-Delhaize merger could be completed in 2016. Weis now operates nine stores in the Fredericksburg-Culpeper area and, according to Weis media relations guru Dennis Hopkins, Weis is committed to investing in its Fredericksburg area stores and plans to remodel six of its stores in the market.
From the desk of death, we have several notable obituaries to report. Wilford Brimley, one of the top character actors of the past 25 years, has passed away at the age of 85. Brimley, who didn’t become famous until his mid-30s, usually played characters who were significantly older than his real age. Among his best roles were as nuclear engineer Ted Spindler in “The China Syndrome” (1979) and as assistant U.S. Attorney Wells in “Absence of Malice” (1981), which starred Paul Newman. Probably the role he’s most associated with is when he played senior citizen Ben Luckett in Ron Howard’s fantasy comedy “Cocoon” (1985). All told, Brimley appeared in 77 movie and TV roles as well as countless television commercials where he was a fixture, from pimping Quaker Oats and later, diabetes-testing supplies from Liberty Medical. Brimley himself was a diabetic, having been diagnosed in the late 1970s. In 1993 he told the Dallas Morning News, “I’m never the leading man. I never get the girl. And I never get to take my shirt off. I started by playing fathers to guys who were 25 years older than I was.”
The oldest living Academy Award winning actress Olivia de Havilland has left us (she actually won two Oscars and was nominated for three others). At age 104, she outlived her acting peer, three-time Academy Award nominee Kirk Douglas, who died earlier this year at the age of 103. Her motion picture career began in 1935 and de Havilland continued to act until 1988. Her 61 credits include her role as Melanie Hamilton in “Gone With The Wind” (1939). Her Oscar-winning movies came three years apart, in “To Each His Own,” (1946) and “The Heiress” (1949). Ms. de Havilland was also well-known for her nearly life-long bitter rivalry with her sister, actress Joan Fontaine, who won the Best Actress Oscar in 1941 for the lead role in Alfred Hitchcock’s “Suspicion.” My favorite de Havilland movie? That would be “The Snake Pit” (1948), in which she portrayed a young bride who becomes mentally ill and is institutionalized. Great screenplay and excellent acting, but de Havilland lost the Oscar that year to Loretta Young in “The Farmer’s Daughter.”
Another newsman of a different sort, Pete Hamill, is no longer with us, either. One of the greatest of the old-school, streetwise, storytelling tabloid journalists, Hamill dropped out of high school in his native Brooklyn and a few years later walked into the city room of the New York Post in 1960 and, with the gift of gab and reportedly some great tales, was hired on the spot. Over the next 50 years, he became a celebrated New York columnist and editor at the Post, The Daily News, Newsday and The Village Voice. Hamill also wrote multiple tomes, including novels, biographies and short stories. Growing up in New York in the late 60s, I viewed Hamill as the quintessential journalist, reporting and opining on news events and social issues of the day with a distinct swagger, as well as writing great character essays about local New York characters from prizefighters to Mafia dons. In fact, in the halcyon days of tabloid journalism (from the mid-60s to the mid-90s), Hamill and Jimmy Breslin were the two greatest progenitors of that artform. If you can find a copy, read Hamill’s 1973 novel “The Gift” – it’ll be a worthwhile experience. Hamill was 85.