Supermarket News: Supervalu Leads Grocery Stocks in 2013

MINNEAPOLIS — Investors rewarded Supervalu for getting smaller in 2013, a year in which almost all food retailing stocks showed double-digit percentage gains in share price.

Supervalu’s stock rose more than 175% during the year, following the sale of its Albertsons, Jewel-Osco, Acme and Shaw’s/Star Market banners. It was the leading share-price gainer for 2013 among the 23 food-retailing stocks tracked by SN.

Following the sale, Supervalu was left with its core wholesale business, the Save-A-Lot limited-assortment banner and several regional chains, all under the leadership of new Chief Executive Officer Sam Duncan.

“We think the rapid rate of recovery at Save-A-Lot underscores how quickly CEO Sam Duncan is overhauling the business overall,” noted Ajay Jain, an analyst at Cantor Fitzgerald, after a recent Supervalu earnings conference call.

Two other stocks also more than doubled in 2013 — Natural Grocers by Vitamin Cottage, which saw it share price rise about 118%, to $42.45 at year-end; and Roundy’s, which rose by a similar percentage, to $9.86.

Natural Grocers by Vitamin Cottage, the fast-growing chain of small-format, natural-food stores, posted double-digit gains in comparable-store sales throughout the year. Roundy’s grew primarily on the success of its Mariano’s Fresh Market chain in Chicago, which was poised to expand even further with the acquisition of several Dominick’s stores in the market.

Both Kroger Co. and Safeway were up sharply, as Kroger continued to grab market share and Safeway shed some of its assets. Kroger’s shares were up almost 50%, to about $39.53, and Safeway was up about 77%, to about $32.57.

Read More: http://supermarketnews.com/retail-amp-financial/supervalu-leads-grocery-stocks-2013#ixzz2pFi6RplB

Supermarket News: It's Time For FDA to Define "Natural"

At the tail end of a year when the genetically modified labeling debate spilled over to GM-containing products that make natural claims, the Food and Drug Administration has again been petitioned to clarify which products can be designated “natural.”

Earlier in 2013, lawyers defending food manufacturers who were sued for using natural claims on foods that contain GMOs and other ingredients considered unnatural by plaintiffs, were hopeful when a California district judge deferred to the FDA to determine the circumstances under which “food products containing ingredients using bio-engineered seed may or may not be labeled ‘natural’ or ‘all natural’ or ‘100% natural.’”

Previous cases resulted in settlements where manufacturers paid fines and removed claims from packages. After being sued, Ben & Jerry’s, which sources 80% of its ingredients non-GMO, removed natural claims and vowed to go GMO-free by mid-2014.

The California judge's decision marked a welcome departure for some. The reason being that although the FDA has yet to define “natural” (it says it’s difficult to define a food product that has likely been processed and is no longer a product of the earth), it has determined that GM foods do not materially differ from other types of food, and even issued a guidance document in 2001 stating: “A label statement that expresses or implies that a food is superior (e.g., safer or of higher quality) because it is not bioengineered would be misleading.”

To add to the confusion, FDA has said that it does not object to use of the term “natural” if the food does not contain added color, artificial flavors or synthetic substances.

Now, the Grocery Manufacturers Association, which staunchly opposes GM labeling, is asking the FDA not only to define “natural” but also allow foods containing genetically modified ingredients to be labeled as such, according to a New York Times report.

A stance on the matter would not just force the FDA off the fence of indecision, but provide much-needed clarity for all parties involved. For an organization tasked with regulating the truthful labeling of all food products, a claim as ubiquitous as "natural" is too influential to avoid.

Read More: http://supermarketnews.com/blog/its-time-fda-define-natural#ixzz2p40tLf2W

Sprouts set to Expand in Georgia in 2014! (My Personal Grocery Retailer Favorite)

Sprouts Farmers Market Announces Expansion in Georgia & Kansas

Grocer Signs Leases for Stores in the Greater Atlanta and Kansas City Areas

PHOENIX, Dec. 23, 2013 (GLOBE NEWSWIRE) -- Sprouts Farmers Market, Inc. (the "Company") (Nasdaq:SFM), one of the fastest growing natural food retailers in the country, today announced its expansion with six signed leases in Kansas and Georgia.

The chain of specialty grocery stores expects to open a new store in Overland Park, Kan. on Jan. 8, 2014. The 23,360-square-foot store will bring an estimated 100 jobs to the Corbin Park Shopping Center at 135(th) Street and Metcalf Avenue.

Phoenix-based Sprouts has quickly become one of the top retailers catering to shoppers' desire for small-footprint natural grocery stores. The Company offers fresh, high-quality, natural and organic foods at affordable prices.

"We are excited to be a part of the Corbin Park project and thank the community for welcoming Sprouts Farmers Market," said Doug Sanders, Sprouts' president and chief executive officer. "Sprouts brings a deep commitment to community engagement and advancement, and we are proud to be a neighbor in this great region."

Sprouts is also expanding into the Southeast with its easy-to-shop stores and unrivaled customer service. Plans are being developed for new locations in the greater Atlanta area, including Snellville, Cumming, Dunwoody, John's Creek and Norcross.

"Sprouts is bringing more than 500 new jobs to the greater Atlanta area and is poised for significant growth," Sanders added. "We look forward to expanding the Sprouts brand and introducing 'healthy living for less' to an even larger customer base."

About Sprouts Farmers Market, Inc.

Sprouts Farmers Market is a specialty retailer of natural and organic foods at great prices. We offer a complete shopping experience that includes fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, baked goods, dairy products, frozen foods, natural body care and household items catering to consumers' growing interest in health and wellness. Headquartered in Phoenix, Arizona, Sprouts Farmers Market employs more than 14,000 team members and operates more than 165 stores. For more information on the locations coming soon, please visit sprouts.com/stores.

Forward Looking Statements:


Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," "believes," or the negative of these terms and other similar expressions) that are not statements of historical fact should be considered forward-looking statements, including, without limitation, the expected timing, locations and job creation estimates for the Company's new stores in Kansas and Georgia and the Company's belief that it is poised for significant growth and further expansion. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, general economic conditions; the Company's ability to successfully open new stores; the Company's ability to manage its rapid growth; availability and cost of acceptable real estate; disruption in the Company's supply chain; and other factors as set forth from time to time in the Company's Securities and Exchange Commission filings. The Company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

GroceryNews: Natural Grocers Q4 Comps Up 10.7%

LAKEWOOD, Colo. — Natural Grocers by Vitamin Cottage here posted double-digit comparable-store sales in the recently ended fourth quarter, but noted that increasing sales of grocery products were pressuring margins.

The company, which operates 74 small-format stores specializing in vitamins, supplements and organic grocery products, said comps for the fourth quarter rose 10.7% on a daily average basis, and were up 11.1% for the full fiscal year.

Net income was up 129% in the fourth quarter, to $2.2 million, on a 28.1% increase in sales, to $115.2 million. For the year net income was up 58.7%, to $10.6 million, on a 28% increase in sales, to $430.7 million.

Gross margin for the year, which ended Sept. 30, was 29.2% of sales, vs. 29.4% the preceding fiscal year. The company attributed the decrease to a shift in sales mix toward products with lower margins, offset by purchasing improvements. In addition, margins decreased for bulk products due to increased production costs as a result of the relocation to a larger bulk food repackaging and distribution center in September of last year.

“We continue to see a shift in sales mix toward grocery products and the shift has helped drive customer traffic, which in the long-term, will help drive our sales in other departments,” said Sanda M. Buffa, chief financial officer, ina conference call with analysts Thursday.

She said the company recorded a 5.9% increase in daily average transaction count and a 4.9% increase in average transaction size for the year.

Read more: Natural Grocers Donates Thanksgiving Turkeys

“We're pleased with the financial strength and solid execution we have experienced over the past fiscal year,” said Kemper Isely, chairman and co-president.

In the fourth quarter, Natural Grocers opened stores in Omaha, Neb.; Beaverton and Bend, Ore.; and Topeka, Kan. It has since opened two additional stores in Tulsa, Okla., and Idaho Falls, Idaho.

The company has signed leases for 10 additional stores scheduled to open in fiscal 2014 in Colorado, Idaho, Kansas, New Mexico, Oregon, Texas, Utah and Washington.

The company projected it would open 15 new stores in fiscal 2014, and achieve daily average comparable-store sales growth of 8.5% to 9.5%, with EBITDA margins of 7.8% to 8%, net income margins of 2.4% to 2.6%, and diluted earnings per share of between 58 cents and 63 cents. Capital expenditures are projected between $35 million and $37

Read More: http://supermarketnews.com/retail-amp-financial/natural-grocers-q4-comps-107#ixzz2lfWmN3b8

The Supermarket of the Future Is... (Hold for Dramatic Pause) NOW!

Over the past few years we have seen modest changes in the bricks-and-mortar side of supermarkets in spite of supermarkets losing 1.6% of dollar sales (and the customers who represent that percentage) to other channels of distribution including drug chains, c-stores, non-traditional outlets and farmers’ markets. Shouldn't this loss be a wake-up call that things as they are need to change?

The only subset of supermarkets that is growing is the fresh format, up 1 percentage point, and those food retailers who have focused on fresh (e.g., Whole Foods, Earth Fare, Fresh Market, Sprouts) are adding locations (estimates are an additional 320 stores by 2017) and excitement to the shopping experience.

According to Nielsen, fresh foods account for 30% of consumer expenditures on food, grocery and personal care here in the U.S. We should expect in 2014 to see dramatic differences take place as major chains include, and build on, many of the attributes of this fresh format.

Look for traditional supermarkets to wake up and rival farmers’ markets … and begin a new way of selling produce and other foods.

I would suggest that it is time that food retailers stop merchandising categories together. Learning from “upgrades” like Greek yogurt, European butters, fine wines and even the new controversial Starbucks $7 a cup experience, expect to find, for example, heirloom tomatoes, corn and melons (which traditionally sell for 50%-200% more than their commodity counterparts) to be merchandised in separate high-end display cases that are temperature controlled with the produce more carefully handled and displayed.

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Supermarkets need to once again become the center of their communities by offering such services as “community cooking centers” where shoppers can collaborate and learn from each other, rather than the old school model of instructor teaching students. It is time for supermarkets to look around us and take the lead from what has already occurred in food recipe social media, and to create a “connected culture” for and with their shoppers. These community cooking centers will also add excitement in-store with their aromas, visual appeal, participant interaction and sounds … and of course let’s push the envelope a bit and include sampling the prepared dishes for those shoppers who pass by in order to reach out and include them as well.

A few years ago “meal assembly locations” were one of the hottest fads of the moment but consumers tired of that experience quickly. More recently we are seeing “meal kits” being promoted and sold online and delivered to your door. Everything you need to prepare six to eight meals for about $10 a meal for two. While a few supermarkets around the country have developed similar programs (Publix in particular), why shouldn’t every supermarket offer this convenience?

The 2013 NGA SupermarketGuru Consumer Panel Survey revealed that almost half of shoppers are cooking more at home and roughly the same amount do not feel “confident” or “in control” with their cooking skills. What an opportunity for supermarkets to build a stronger relationship by offering the cooking solution; 75% of the survey respondents said they wanted better cooking skills

Article Brought to you by SuperMarketNews.com

Read More: http://supermarketnews.com/blog/supermarket-future-now#ixzz2jDRa1C9B

How Paper Towels Could Be Key to Amazon’s Quickly Increasing Grocery Channel Market Share

The customer is always right.

Sounds trite and old-fashioned but that's the way Amazon (AMZN) founder and CEO Jeff Bezos has run his business since its inception in the 1990s. And while this laser-focus hasn't led to huge profits yet (the company does not regularly boast about its razor-thin profit margins or recent quarters where they've actually lost money), the promise of their future retail muscle has helped the stock flirt with all-time highs this year. It has also meant that its millions of customers can count on the company to try to undercut almost any competitor's price, every time.

Related: How Amazon's Mayday Could Change Your World and Disrupt Apple

Now Amazon is working with household products giant Procter & Gamble (PG) -- and will soon be partnering with Kimberly Clark (KMB) among others -- inside its warehouses and distribution centers to ramp up efficiencies in the transport and delivery of everyday goods like paper towels and toilet paper. They're using their own system called Vendor Flex to ship products directly from manufacturers to the people who use them. Here's how The Wall Street Journal describes the simple process:

"Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them."

"This is one of the biggest growth areas for Amazon," RBC Capital Markets analyst Mark Mahaney told the Journal.

"What e-commerce is doing in general, and Amazon is at the forefront of this, is just making the whole system more efficient," says The Daily Ticker's Henry Blodget. He asks: why should P&G make the paper towels in one manufacturing facility, ship the product to a warehouse, which then ships to Amazon or to a store, when it could directly ship it to you right from the start?

Related: Amazon's Secret Plan to Sell You Everything!

Aaron Task points out that this is just the beginning. "Right now, only 2% of American households get their staples -- toilet paper, paper towels, etc. -- online, that's still $16 billion of revenue. So if they could just move the needle a couple percentage points, it's a potential big growth area for them."

Amazon had more than $60 billion in sales last year. If they can get a real grip on selling household products regularly to Americans, they could disrupt a company like Walmart (WMT) which is famous for its distribution efficiencies.

The goal for Amazon of all these partnerships and efficiencies is to offer even lower prices to you, the customer. If they continue to revolutionize the shipping and distribution process, well, that's good too.

"This is the thing that a lot of people missed about Amazon..." says Blodget. "There's no limit to what they can sell. So Amazon has broadened incredibly widely in terms of what it sells, it can also go incredibly deep into any category and sell any flavor of anything."

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