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Albertsons says outcome of strategic review isn’t imminent, but real estate a key focus

Albertsons Companies President and CFO Sharon McCollam appeared at a conference last week and provided a small bit of additional detail on the company’s “strategic review”, which it launched this spring.

The Boise-based company launched the review process in February, and said it would consider a sale, acquisitions or other options.

During the Bernstein Strategic Decisions Conference last week in New York, McCollam was asked about the key strategic decision at the very end of a nearly hour-long chat.

“We felt the company was undervalued with respect to our core peers,” McCollam said. “With that, we said, ‘you know what, we owe it to our shareholders with this type of underlying performance and opportunity in front of us to be sure that we are doing everything we need to do in order to create the value we believe is there.’ That was the foundation for the announcement.”

Value of real estate

A map of Albertsons store locations

Unprompted, McCollam brought up the company’s real estate assets. It owns the land and buildings for many of its store locations, as well as leasable retail space adjacent to stores, warehouses, corporate offices and a variety of other operations.

“We are looking, of course, at our real estate,” she said. “We have a tremendously valuable real estate portfolio. Pre-IPO in 2019, it was valued at about $11 billion. “

McCollam said a full appraisal of the real estate portfolio is a long and involved process.

“We are looking at what is the value of what we own. So much of it is a west coast based, so we expect it has appreciated.”

In its latest annual report, Albertsons says it owned or had a ground lease on about 39% of its store locations, and just more than half of its industrial locations. That works out to ownership or ground lease on roughly 900 of the company’s 2,277 stores as of February 27th.

Nothing imminent

Sharon McCollam Albertsons
Albertsons Companies CFO Sharon McCollam

McCollam said any outcome of the strategic review isn’t imminent.

“We will continue to look at all opportunities and have all discussions you’d expect us to have,” she said. “I would expect we are still a period away, and we are not in a hurry. The world is changing around us as we think about these things. The foundation of our business is strong.”

After the announcement of the review, Albertsons’ stock quickly moved higher on the news.  In the months since, the stock has slid, and now trades for less than before the announcement. However, the stock has outperformed the S&P 500 index over the same period, during a time of turmoil in the overall market.

In April, Albertsons said its overall valuation, which is lower than peers like Kroger, in part prompted the review. The long-held ownership of Cerberus Capital Management is also said to be a factor in the process.

Grocery Dive earlier reported on some of McCollam’s comments at the conference.

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Don Day - BoiseDev Editor & Founder
Don Day - BoiseDev Editor & Founder
Don is the founder and publisher of BoiseDev. He is a National Edward R. Murrow Award winner and a Stanford University John S. Knight Fellow. Contact him at [email protected].

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