- Blackwells Capital has proposed a slate of six independent nominees for Supervalu’s nine-seat board of directors, according to a news release. This list includes former Starbucks and Sysco executives, along with Rick Anicetti, former CEO of Food Lion and The Fresh Market; and Frank Lazaran, who previously served as CEO of Marsh Supermarkets and Winn-Dixie.
- Blackwells is also proposing several steps for Supervalu to take, including selling off its retail division, a sale-leaseback of its distribution real estate, and even a sale of its wholesale business. Supervalu recently announced the sale of its Farm Fresh banner, with deals reached on 21 of 38 stores, but Blackwells classified the move as an "incremental step" that hadn't satisfied shareholders' demands.
- Supervalu, meanwhile, said in a statement that Blackwells' nominations amount to an attempt to take control of the company, and noted the firm "seeks representation that is highly disproportionate" to its stake. In recent years, Supervalu has focused on building its wholesale business, which now comprises 75% of total sales, while attempting to boost its retail division through store remodels, sell-offs and product innovations.
Supervalu's sale of its Farm Fresh banner earlier this month was an attempt to address the shareholder concerns outlined by Blackwells. But the hedge fund was less than impressed with the move. In a statement issued yesterday, managing director Jason Antaibi said incremental moves like this one — which effectively shed 10% of Supervalu's retail business — were too little too late.
"To unlock value for shareholders, the Company must change fundamentally, and change must begin at the Board level," he said. "We believe a different, and more cohesive and experienced, group of directors are needed to effectuate real change at Supervalu."
Blackwells' six nominees is double the number the firm had previously proposed, indicating just how serious it is about forcing significant change at Supervalu. The slate includes two former retail executives, including Rick Anicetti, who resigned as CEO of The Fresh Market last year for undisclosed reasons, and Frank Lazaran, who has more than 40 years of experience in the retail industry.
The nomination of two highly experienced retail executives indicates Blackwells wants to rehabilitate Supervalu's struggling retail division rather than divest it. However, this is a tall task and may not satisfy the firm's desire for a swift and significant boost to the company's value.
Supervalu has tried to improve its retail business in recent months, and maintains the transformation of its four remaining banners is underway. Last year, it named former Target executive Anne Dament to lead the division, and has undertaken store remodels and product innovations to improve value. This includes the launch of a Quick & Easy Meals line that offers heat-and-eat as well as light-prep fresh dinner solutions.
A source interviewed by The Wall Street Journal said Supervalu intends to play offense in this fight, and that certainly seems to be the case so far. The company issued a lengthy response to Blackwells' board nominations, pointing out attempts to reach a more diplomatic solution with the firm.
"Members of our Board and management team have had several discussions and meetings with representatives of Blackwells over the last several months to discuss overlapping objectives and attempt to reach a constructive path forward," a statement from Supervalu read. "Nonetheless, Blackwells has chosen to respond with a public campaign and an attempt to take effective control of the Company."
The challenges to the old guard of grocery retailing are daunting, especially for a complex company like Supervalu, which includes a large wholesale distribution operation, a retail arm with six banners, as well as pharmacies and fuel centers. Supervalu has been focusing on its wholesale operation lately and expects it to be the “dominant” part of its strategy in the future, said CEO Mark Gross. No matter who ends up winning this proxy fight, Supervalu will continue to build its wholesale advantages and scale down its once-dominant retail business.