Mark Gross, President and CEO, Supervalu (Photo: Supervalu)

The new Supervalu CEO is a dealmaker

Supervalu has named Mark Gross as its new president and chief executive, succeeding Sam Duncan who will retire from the company at the end of the month. Mr. Gross brings with him a reputation as a mergers and acquisitions expert, the apparent right skillset as Supervalu looks to execute its spinoff of the Save-A-Lot business.

Mr. Gross worked at C&S Wholesale Grocers from 1997 to 2006 in a number of financial and general management positions. In 2005 and 2006, he was co-president of the company’s operations. Following his time at C&S, Mr. Gross founded Surry Investment Advisors, where he guided grocery clients on acquisitions and divestitures and consulted with private equity firms on investments in food retail and distribution.

The big question around Mr. Gross’s hiring — will he be looking to sell other parts of Supervalu’s business once the Save-A-Lot deal is done or will be a buyer at that point?

According to a Wall Street Journal article, it’s more likely that Mr. Gross will be looking to sell. Supervalu’s stock is down 36 percent this year on top of a 30 percent decline in 2015. The valuation of the company could make some of its assets appealing to the right parties.

In addition to its core grocery wholesale business and Save-A-Lot, Supervalu owns and operates five supermarket chains with 228 stores in seven states: Cub Foods (80 stores), Farm Fresh (41), Hornbacher’s (six), Shop ‘n Save (45) and Shoppers (56).

In reporting Supervalu’s third quarter results last month, current CEO Sam Duncan said that, while earnings were in line with its operating plan, “improving sales is a primary focus” of the company as a whole. Is this something Mr. Gross is able and willing to see through or do he and Supervalu’s board have something else is mind?

BrainTrust

"Gross’s experience at C&S should be helpful to sharpen the operation at Supervalu, even though many of C&S customers have voiced disappointment over the years about C&S’s ability to deliver on their stated promises."

Mark Heckman

Principal, Mark Heckman Consulting


""

Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


""

Adrian Weidmann

Managing Director, StoreStream Metrics, LLC


Discussion Questions

What do you expect Mark Gross to do at Supervalu aside from seeing the Save-A-Lot spinoff through? Do you see any parts of Supervalu’s wholesale and retail businesses as particularly attractive targets for acquisition?

Poll

4 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
David Livingston
David Livingston
8 years ago

Supervalu’s stock price sums up their situation. They are not very good at grocery retailing or wholesaling. So they are probably better off getting out of those two segments of the industry. Of course Supervalu is attractive at the right price. Even Roundy’s was sold for pennies on the dollar to Kroger. There are plenty of prospects to buy both segments. But don’t count on a top-notch company to rescue them. There is a good chance it could be a distressed assets specialist looking to buy the debt and guide them through a well-planned bankruptcy. Mr. Gross doesn’t have his name on the stores so I don’t expect him to hold on until all hope is lost. I predict he will take action much sooner and with maximum effectiveness. The buzzards have been circling the Twin Cities for a few years now, looking to take advantage of Supervalu’s difficulty in guarding their market share.

Mark Heckman
Mark Heckman
8 years ago

I somewhat echo the sentiments of my colleague, Dave Livingston in the sense that Mr. Gross’s hiring, given his background, is surely aimed at selling off assets and focusing on improving the wholesaling business. Supervalu has never seemed to be able to regain their swagger since expanding the retail side of the business a few years back and I would imagine the wholesaling is the core competency that Mr. Gross will attempt to nurture.

Gross’s experience at C&S should be helpful to sharpen the operation at Supervalu, even though many of C&S customers have voiced disappointment over the years about C&S’s ability to deliver on their stated promises. If and only if Mr. Gross can both deliver services and efficiencies to Supervalu’s retailers while sharpening the bottom line, there may be good news coming out of Minneapolis in a year or two.

Brent Biddulph
Brent Biddulph
8 years ago

It is clear that the aim here (or should be) is to continue to sell/spin off all company-owned interest in retail operations at the best possible asking price, then revert back to the core business of wholesale food distribution. Merging wholesale distribution and retail cultures has not exactly a winning recipe in the supermarket industry — if the Albertsons-Supervalu-Albertsons LLC saga of the past decade of buy-sell-swap real estate plays taught us nothing else, it was this.

While providing financial support to prop up retail locations and owners is commendable service by wholesale food distributors — in the end, it is self-serving in respect to expanding the network of locations to push goods and extend leverage on CPG vendors for trade dollars.

Getting back to the roots of what Supervalu does best — providing a low cost wholesale food distribution supply chain and procurement services of new and unique products for independent retailers is the best case scenario (and most honest business model).

While the past decade has been an interesting experiment in merging wholesale distribution and supply chain excellence with retail ownership and execution, let’s be honest here — it has been a dismal failure.

Ross Ely
Ross Ely
8 years ago

The new CEO’s experience at C&S Wholesale is well-suited to Supervalu’s focus on wholesale and retail operations. I expect him to bring renewed energy around improving Supervalu’s core businesses based on principles from his experience at C&S. The emphasis will be much more around growing the wholesale and retail businesses as opposed to seeking divestment opportunities.