This sector has been under pressure because of stressed out margins due to higher commodity prices. Since we already know the "real" economy never recovered and the cyclical stocks went up on easy money and meanwhile SVU, IMKTA, KR, SWY struggled. Now, dollar strengthens, economy still crappy so people will shop more at grocery stores instead of dining out. Also, lower interest rates should benefit the consumer as well through refi's. Could this company also restructure their debt at lower levels thus paying off the loans quicker or paying less fees? I'm just throwing these ideas out there it seems unfair we never really got a true "bounce" like the other sectors when things were good, now that they are bad we are going down as fast if not faster! Futures not looking good as I type this, rough waters tomorrow even though CORN, OIL, SOYBEANS, WHEAT, etc are all down! Good luck!
Great Post....I think things will improve and look for our financing to get refinanced perhaps at much lower rates...lets see what happens SVU is paying down they're loans at a fairly good clip...and continuing to do so!
Also, boggles my mind you want to talk debt... Look at MGM. This company is in debt up to their eyeballs, doesn't pay a dividend, and also has to deal with a struggling consumer (that doesn't sell a necessity item). Yet that stock seems to be holding steady at 10. I don't think it should even be trading where it is but continues to do so. Just shows the insanity in this market.
I don't know whether avg Joe can re-negotiate a better mtg rate when he is under water on the mtg or is unemployed. Banks would love to loan more, but few qualify under the tighter loan restrictions.
With the Fed's new "twist strategy", maybe SVU can restructure some of their long term debt.
But the real problem is determining how competitive SVU is in the grocery space. The anecdotal evidence of my own experience here in Chicago, is the Jewel stores have great locations, but their produce dept totally sucks, their merchandising strategy on cereal products is preposterous, their bakery makes these SMALL high end loaves of bread that cost from $4.50 to 6.00, and then they only have one or two loaves available, if that. We end up shopping elsewhere at a produce and vegetable store that has tremendous throughput at all times of day and has recently introduced fresh meat. The Aldi chain is making great strides as well.
While I've got a decent position in SVU and hope they can maintain the divvie, to me the greatest threat to this turnaround story is whether SVU can compete in the retail grocery space. (I think the CEO is capable on the financial mgmt front, but don't know whether that's enuf.)
SVU owns Shaw's, a north east small chain of groceries with the Osco pharmacy attached. I will not shop at Shaw's. They implemented a membership card that carried a discount for the patrons, of which I was one of then (three years ago now). I can not receive a discount at the store without that card, even if I am paying cash. What kind of thought went into that gimmick? If a customer pays me in cash, you bet they will pay the same price as any other customer.
I get they 'track" your purchases through this big brother technique, but I do not want to be "tracked" by my grocer, I just want quality service, selection and pricing that will keep me , an independent customer, that will exercise my freedom of choice..... get SUV? freedom to walk away from your ill advised tracking systems.
Hey other than that, I trade this baby for 10 -15% gains all year long. Track that Shaw's!!
I trade this stock, but if I were a long-term investor, I'd buy right now...next few months the debt situation will start to clear and this thing will be up on the right track. I will not be surprised to see it in the $15 range next 3-5 years.