Will the second time be the charm for Albertsons’ IPO?
Albertsons Companies, the second-largest supermarket operator in the U.S., is ready to go public after nearly 15 years of private ownership by Cerberus Capital Management.
The parent company of its namesake chain, Jewel-Osco, Safeway and Vons should be in a strong position as it launches what could be one of the biggest initial public offerings of the year.
The Wall Street Journal reported in January that Albertsons has made strides in reducing its debt level, which stood at $8.34 billion in January (excluding leases), down from $10.52 billion at the same time last year.
The supermarket operator, which has been investing in store remodels and technology upgrades, posted a 2.7 percent gain in same-store sales during the third quarter. It was the eighth consecutive quarter of comp gains for the retailer.
“We are focused on providing our customers with an easy shopping experience, exciting merchandise and friendly customer service in our omnichannel shopping environment, and creating deep and lasting customer relationships,” said Albertsons CEO Vivek Sankaran in a statement at the time.
Albertsons’ private labels remain an area of strength, having grown to 25.6 percent, a new high for the business, in the most recent quarter. Registrations in its Just for U loyalty program were also up 25 percent.
The company’s online business is also growing with combined home delivery and “Drive Up and Go” purchases up 34 percent.
Albertsons has improved its gross profit margin as well, which grew to 28.3 percent in the third quarter as higher private label sales and lower shrink expenses came together at the same time.
In January, Mr. Sankaran said the grocer’s cost reduction and productivity measures were “beginning to take shape” and that Albertsons planned to use the proceeds “to fund strategic growth investments, offset cost inflation and support earnings growth.”
- Albertsons Companies Files Registration Statement for Proposed Initial Public Offering – Albertsons Companies, Inc.
- Albertsons Companies, Inc. Reports Third Quarter Results – Albertsons Companies, Inc.
- Albertsons Files to Launch an IPO – The Wall Street Journal
- Albertsons Prepares for an IPO, Again – The Wall Street Journal
DISCUSSION QUESTIONS: What do you see as the pros and the cons of an IPO for Albertsons? What will be the company’s biggest challenges and opportunities in the next couple of years?