Is anyone else keeping up with all the supermarket speculation surrounding Randalls, which operates stores in Galveston and League City?
Ever since 1999, when Calif.-based Safeway paid $1.43 billion for Randalls, then a 116-store chain, rumors have surfaced now and then about a possible sale.
But all was fairly quiet until October, when Safeway Inc., which operates 1,046 stores, including Randalls, said third-quarter earnings fell 58 percent and the supermarket chain announced plans to check out of the Chicago market, where it operated 72 Dominick’s stores.
That move came after Safeway said in June it would sell its Canadian stores.
Safeway for the third quarter reported a profit of $65.8 million, or 27 cents a share, down from $157 million, or 66 cents a share, a year earlier. Safeway said its net income was hurt by a software impairment charge, higher theft and lower property gains.
Robert Edwards, president and CEO of Safeway, told the Daily Herald that exiting the Chicago market would allow the company to grow its sales and profitability in core markets.
Edwards also said the Chicago market, relative to other markets, was quite "fragmented and diverse, with independent competitors and an influx of new companies competing there."
Analysts observed that Dominick's cost structure was much higher than competitors because of a strong employee union.
The move to shed a chain in a tough market made observers wonder about Texas, where competition also is fierce and fragmented.
Randalls had already raised eyebrows in Houston earlier this year when it said it would shut down its South Voss location — in prime grocery store territory — because of “an expired lease and an unsuccessful effort to reach landlord agreement on a new store.”
Grocery industry consultant David Livingston told CultureMap Austin he predicted that a sale of Safeway’s Randalls and Tom Thumb stores was “very likely” and would happen “very soon.”
I grew up in Houston and have always had a fondness for Randalls.
The formerly family-run company changed that city’s grocery scene by introducing the Flagship concept, upping the ante with in-store bakeries, delis, floral and coffee shops, pharmacies and more. But competitors such as H-E-B and Walmart, Target and dollar stores came along, changing the way we shop for groceries.
In a call with investors in October, Edwards said "strong store base, brand positioning and sales momentum, built from recent retail and loyalty initiatives," would help the company become more profitable, according to reports.
Late this afternoon, I reached out to Randalls for a comment about the possibility of a sale. I will add any response to this blog when I receive it.
In the meantime, do you care to weigh in on Safeway’s next move? Are you a Randalls shopper?