Albertsons IPO Is Back On Hold

Albertsons still wants to go public, two years after first mulling and tabling an initial public offering, Bloomberg reports. Yet once again, the grocer is going to have to put that dream on hold as it struggles to get its same-store sales back into the black. Same-store sales dropped into the negative in fiscal 2016 and have yet to recover.

It’s not doing Albertsons any favors that, between the popularity of grocery pickup and delivery services, cheap groceries at Walmart and the debut of German discounter Lidl in the U.S., that grocery stores are in an all-out price war right now.

The company’s plan was to go public by the end of the year and relaunch with a narrower price range, tapping investors who had shown interest back in 2015. It also hoped to expand its natural and organic offerings.

But all of that was before Amazon bought Whole Foods. Now, between that, Albertsons’ own slipping financials and uninspiring stock performance by its closest rival, Kroger, stakeholders doubt it can reach the $12.4 billion valuation it targeted in 2015.

It’s insult on top of injury. Albertsons spent April and May trying to negotiate a deal for Whole Foods, only to have the organic giant join forces with the eCommerce giant instead.

The Amazon-Whole Foods acquisition has thrown a wrench in a lot of grocers’ plans. Kroger, Supervalu Inc., and Weis Markets Inc. all suffered the day of the announcement. Meal kit delivery service Blue Apron also suffered, putting a bit of a damper on its recently proposed IPO.

Albertsons has also been in merger talks with Sprouts Farmers Market Inc. An acquisition would strengthen the grocer’s perishable and natural food offerings, Bloomberg Intelligence said – a strategy that competitors have also latched onto, hoping to keep an edge by improving the quality of their food.

But it all may be for naught. Roger Davidson, a former grocery executive and president of industry consultancy Oakton Advisory Group, thinks it’s pretty hopeless.

“They don’t have a shot,” Davidson said. “Traditional grocery is fading fast.”


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