Save-A-Lot IPO will fuel Western expansion

sav a lot store

Supervalu’s potential spinoff of its Save-A-Lot division will prime the discount banner for aggressive unit growth and separate a business that has little in common with the distributor’s retail and independent businesses.

“It’s a totally different animal,” said Sam Duncan, Supervalu’s CEO, speaking at an investor conference last week in Minneapolis.

Supervalu announced earlier this month it was exploring a potential public spinoff of Save-A-Lot, but cautioned a deal may not materialize. However, CFO Bruce Besanko, speaking at the same event last week, acknowledged a change was all but inevitable given the company has already spent more than $2 million exploring the move.

“There’s no guarantee it’s going to happen. But you can certainly bet that we spent money last quarter, [and] we’re going to spend money in the second quarter here to continue to march down the path, and we wouldn’t obviously spend that kind of money unless we were certainly serious about something like this,” Besanko said. “So that’s very exciting for Save-A-Lot, very exciting for Supervalu, to be able to unleash the power of that brand as a standalone entity.”

Another possibility, Besanko acknowledged, was an outright sale of Save-A-Lot. “We’ve had some inbound calls now that have expressed some interest and so that’s a possibility — there could be a combination hybrid of [a sale and IPO],” he said.

The spinoff will help fuel Save-A-Lot’s growth — particularly into the Western states like Nevada and California — where Save-A-Lot has little to no presence, Duncan said. However, Duncan pointed out that both he and Save-A-Lot CEO Richie Casteel have extensive experience in Southern California, where they previously worked with Albertsons. Duncan is also a former Ralphs president.

“The company tried hard years ago to go into the West, but really didn’t have expertise,” Duncan said. “But we know this area very incredibly well. My background is Southern California, Nevada. I ran stores in Nevada, and we’re going into Nevada. We’ll have Save-A-Lots in lots of new markets, including Los Angeles. … We’re looking for $30,000 to $45,000 in household income, that is our wheelhouse. And there is plenty of opportunities for that in the California and Nevada area.”

The following two tabs change content below.

Latest posts by Julio Ibañez (see all)

Sé el primero en comentar

Dejar una contestacion

Tu dirección de correo electrónico no será publicada.