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[10 comments]

Behind Albertsons' For Sale Sign

October 21, 2005

By George Anderson

Albertsons is for sale but an actual deal being signed seems pretty far off, according to a piece in The Wall Street Journal.

The article points out that while Albertsons has some attractive properties, such as its pharmacies and the Jewel-Osco, Acme and Shaw's grocery chains, no one seems willing to swoop in and buy up the entire company. In fact, there are many parts of the company that many would just as soon avoid.

Meredith Adler, an analyst with Lehman Brothers, says that 934 of the company's roughly 2,500 stores are underperforming and many in Southern California have yet to regain the business they lost during the grocery workers strike.

Bids for the business are coming in, however, and the chain expects to have that portion wrapped up next month. The company is hoping that if bidders aren't interested in trying to run grocery stores, they will covet the real estate that the locations stand on.

From a strictly retail point-of-view, Albertsons is worth $6 billion to $8 billion, according to Robert Summers, an analyst at Bear Stearns Cos.

Moderator's Comment: What impact do you think the news about a potential sale is having on Albertsons' employees? How do company managers go about running the business under the "For Sale" sign? - George Anderson - Moderator

Discussion Questions:

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

During a ''For Sale'' period, is there any avoiding a negative impact on sales as a result of employee nervousness and anticipation?

Comments:

From personal experience, I can tell you that, as an employee, you begin to focus on your own future and not that of the company. When I found out Roundy's would probably be sold, I focused my efforts on starting a consulting business. Typically, in any kind of buyout, the new owners will want to bring in their own people. It's rare that new owners are welcomed with open arms and are able to hit it off with the employees. It seems like everybody's cheese gets moved and few welcome the change. It is very difficult to keep any kind of normal continuity. Good people resign and move on while hanger-on'ers who don't have much marketable talent are left guarding the fort.

David Livingston, Principal, DJL Research

I work for Albertsons in one of their warehouses. Because of not knowing what is going to happen, it has a bad effect on people. All we can talk about is, "Will I lose my job after years of service with the company? They will close the doors and walk away." Anyone can see why they are losing the market share due to no customer service and high prices. In trying to save money, they took out the two things that bring people in. A person will spend money if they get good customer service to carry their food out to their car. It's hard to keep working and stay knowing you will be out a job and your CEO gets another million.

'horsemen'

EVERYONE will be impacted. Even those who are "protected" will spend time thinking about the changes to come. Those who are not protected will be less productive even if they try to approach things in business as usual vein. Change is one thing, but uncertainty about when and who can be debilitating to many before the change ever occurs. There are a lot of folks looking for the lifeboats today.

'DVZ'

I have to disagree a bit with Mark. It is very hard to keep the sale of a company secret unless there are just one or two serious potential buyers. Often in retail, chains will hire investment bankers to broker the deals. They contact about 50 companies and ask each one to sign a confidentiality agreement. What good is that? They send out a prospectus and the copy machines go into overdrive. Now you have at least a dozen executives at 50 companies chatting it up and soon about 6,000 people know about it. In a perfect world, secretaries would not gossip, sneaky employees would not rummage through the trash after hours, office cleaners would not be on the take, IT would not hack into emails, and senior execs could keep their lips sealed. But it's not a perfect world and that is why many of us knew about the sale/closings of Farmer Jack, Tops, Randalls, Albertsons, etc. weeks in advance. Sometimes it's best to lay the cards on the table rather than to have rumors that turn out to be true distract employees and cause further distrust.

David Livingston, Principal, DJL Research

People's attitudes will fall into these groups: (1) BAU (business as usual) versus (2) time to circulate resumes. If Albertson's CEO is concerned about group 2, those people can be selectively protected with termination agreements. My guess is that certain people are already protected and the others are not considered critical. The best way to sell a company is to do it privately, without the employees or suppliers knowing until after the deal is done. Telling the whole world in advance usually slows internal productivity and makes suppliers and customers nervous, too. Mergers and acquisitions of huge companies are done every month without anyone knowing until after the deal is done. Companies that do this work secretly create less damage and there is no embarrassment if the deal breaks up at the last minute. M&A is a management skill, which can be learned, like many other skills.

Mark Lilien, Consultant, Retail Technology Group

Having the opportunity to work with Albertsons headquarters staff, I can tell you they are operating "full steam ahead." A number of recent management changes have been made in the perishables merchandising area, and there is tremendous enthusiasm, focus and sense of purpose. The fact that they are for sale seems to be a non-event for the employees with which we interact.

Mark Boyer, President, PMG, LLC

How can Albertsons' store employees become any more disengaged and disinterested than they already are? At this point, they believe that they work for their unions, not for their stores.

So far the comments today have focused on HQ and other management positions, while by far the most numerous (and critical) employees are in the stores. That's where customer interaction and service happen – not in an ivory tower – and where Albertsons' sales levels must be maintained or increased in order to protect or enhance sale value. Management has been unable to motivate this critical workforce for a long time, now, so how will they keep them on their toes throughout the sale process?

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

Even though Mark says the Albertsons HQ staff are like happy Green Giants, if I were an Albertsons employee today I would hope the sweat on my upper lip and the anxiety in my eyes didn't reveal themselves in my interviews for another position.

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Gene Hoffman, President/CEO, Corporate Strategies International

I've worked for Albertsons for over 15 years and it is and always has been a great company. There have been a lot of changes here in the Texas area but, overall, we have some terrific leaders in the DFW area. I'd hate to see Albertsons leave the area and what I would like to see is a change in the wage category for all unsalaried employees. So many of these employees are hard working and loyal. In the midst of the presumable sale, we are still working hard to get sales and profits up and keep our customers satisfied. We will continue to do whatever it takes to keep Albertsons' reputation for great service with our customers.

Anonymous

I worked in the Houston market and was there during its shutdown. It has a huge affect on the employees' attitudes during a "for sale" time. Most people lose the desire to produce 100% because they are losing their jobs anyway you look at it.

Anonymous

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