Idiot company negotiators that agreed to long term contracts with unions for long term pensions and long term medical care should be fired.
No company should should agree to these plans. It is impossible for any company to project much beyond 1 year of profits.
Unions should take on this responsibility with membership plans, such as a 401 plan.
The union labor is SUPERB in a big box, this movment towards crap- low wage- labor does not have a chance to sustain an Albertsons, all you idiots who want to drive wages to Vietnam levels DON'T HAVE A CLUE what the pressure is in a big-box, the employees work 24/7 dedicated, there is NO WAY they don't deserve MINIMUM $15/hr. All you southern rightwingsers think an operation like a Safeway, Vons, Ralphs , etc can be run by a bunch of morons from Walmart, @ $10/hr, well that's your wet-dream, the race to the bottom, forget it...big grocery boxes are a massive operation, with dedicated managers, TREMENDOUS MANAGERS (90%)providing a service that 50% of the populous would not qualify if you put in an application.
Some early history of what put Albertsons in trouble,at this point on the time line we, Albertsons felt the need to capture market share, expand or expire.The company was buying up small mom and pop operations.Remember cramer (some say colorful investor analyst, Opinions?? mine not positive)At this time he was making trading book for the American Brands grocery chain,Cramer chacterized them as doing ok but cramer was`nt making big bank,INHO.Being friends with goldman sucks allowed him to unload the american chain onto Albertsons.Due dilligence not so much, ment albertsons ended up with alot of underperforming stores and a downward bias to it`s future.The deal was`nt about albertsons future it was about the deal makers making money.
Do unions bleed a company, or does management compensation? Top management and directors of major corporations consistently draw huge pay and bonuses with little tie to long term performance. Sometimes they cause more damage than good. Look at the bafoons that orchestrated the Albertson's acquisition at peak value!!!!!!!!!
If I'm going to point fingers, I'll point them at managements first. The union people work hard and add value, and I can't say the same about top managements and directors.
CALPERS the biggest Calif pension only made a little over 1% last yr, and only now are they reducing benchmark (BS) from 7.75% to 7.5%. To get that they are throwing money to hedgefunds/riskier stuff. It's estimated Bernanke's robbing savers takes $500Bil/yr out of economy.
Get this: I got a (annual form)letter from the pension, I had to go to the bank yesterday and have NOTARIZED-- an annual filing that I sware I'm not working and that I can't even work a non-union grocery job(without CBA) or I lose my pension!
Ok, let's put aside your issues with unions and talk about pension costs and SVU as an investment. I don't recall hearing anything about pension funding issues in any of the recent quarterly earnings calls. I do recall reading a seeking alpha piece that suggested the company's pension was under funded. this article said the company thought their pension fund was fully funded. The author of the piece stated according to "his" calculations the company pension was underfunded by some 300 million over 20 years because "he" thought company's pension investment return assumptions were too optimistic. As I understand it, any "member" can publish an article on that website. I, for one, enjoy reading the articles posted there as I like to be exposed to well thought out opnions whether I agree or disagre with the opinion. Let's assume that the article is accurate and SVU needs to make up 300 million in their pension fund over say the next 10 years. We are talking about a company that has paid down over 3 billion dollars (that's billion with a B) during the last four years. After 2016, they have a stretch of eight years without any significant debt maturities. Are you trying to tell me, this company can't provide an additional 300 million over 10 years let alone 20 years? Also, the CEO has over 350,000 shares and the CFO owns over 55,000 shares. Why aren't these two insiders bailing out and liquidating their shares if there is such an issue? You don't have to look too far in the sector to find a CEO and CFO unloading shares in 2011. Except they don't work for Supervalu. They work for Kroger. Why? Kroger is a well run company. It's all about valuation. Supervalu is undervalued. Perceptions are changing right now. The four year bear cycle for this sector and company is about to shift. The stock market can anticipate these turns by 6 months. The excessive short interest will prove volatile to the upside. The easy money for the past four years has been on the short side. The easy money going forward will be made in the opposite direction. The fresh produce, fresh prices initiative is quickly gaining traction. The full carts and happy shoppers have returned with smiles on their faces. Soon SVU shareholders will be smiling. You will see. Can't wait until April! Good luck and God Bless...
Full disclosure: Long SVU, long $7 July calls, long $7.5 January calls
You have NO! projected growth until late into 2014. And that's assuming you don't go belly up before then. You are grasping at nonrealities if you think you'll be fine in the Spring. Quite to the contrary you will begin to unravel at a rapid pace by then......Krogerrrr Lonnnggg Krogerrr Stronnnnggggg
Full carts and happy customers provide same store sales increases.
This is one of the few supermarkets that has been unable to achieve same store sales increases in the current environment of relatively high food price inflation.Even chains that are losing customers due to the economy are getting sales increases because of commodity inflation.
The company has gone 13 quarters with sales dropping and has showed no signs of being able to reverse the trend.
This was made worse when last quarters numbers came out.The same store sales loss had gone from almost double digits down to the low 2% range and appeared to be improving coming into the numbers.The percentage of sales drop bounced up to the high 2% range and sent the stock back down.
The net has been preserved by cutting cap ex year after year.The company has finally admitted they need to start spending in that area again.This will put huge pressure on the net unless sales start to rise.
Most pensions are not doing that great right now even if the companies are providing what in the past would have been sufficient capital as pensions are just like savers.They have cash and are looking for conservative investments.Take the current real estate situation and add it to the fed/gov artificially holding down interest rates and most expected returns on pensions are overstated.
With all of the issues and problems this company has one advantage, its size in comparison to its value.If the company starts to produce the stock price would have plenty of room to run.The problem is at this point the only thing that they can do to get the stock moving is run competitive grocery stores and they have shown no inclination in that department.If they do not improve at what after all is their main business there are plenty of chains that are adding new stores and entering new territories that will be willing to serve the customers.