Albertson's Moves Upscale with Bristol Farms Purchase

cc Wednesday, September 22, 2004 latimes.com/business Albertson's Moves Upscale With Bristol Farms Purchase By JAMES F. PELTZ TIMES STAFF WRITERS Shopping in the gourmet aisle, supermar- ingly tough battle not only with other con- mented unsuc- ket giant Albertson's, Inc. on Tuesday ventional grocery chains, but also with cessfully with bought Bristol Farms, which operates 11 mass-merchandisers such as Wal-Mart lower prices three upscale food stores in Southern California. Stores Inc. that are becoming a huge force years ago. The The price paid to Bristol Farms' owner, in groceries using cut-rate prices. move boosted the Los Angeles investment firm Oaktree Albertson's also is still smarting from the sales, but "we Capital Management, wasn't disclosed. 4½-month grocery strike and lockout in weren't delivering But sources close to the companies said the Central and Southern California that ended the [profit] mar- deal was valued well in excess of $100 in February. Albertson's and Kroger's gins we needed," million. Ralphs chain locked out their union workers the trade publica- Bristol Farms, based in Carson, is a 22- after members of the United Food and Com- tion Supermarket year-old chain with stores in Los Angeles, mercial Workers union struck Safeway News reported Orange and Ventura counties. It has annual Inc.'s Vons and Pavilions chains. Davis saying in a sales of between $150 million and $175 In the six months ended July 29, Albert- speech last year. million, and 1,250 employees. sons' net income plunged 58% from a year Bristol Farms KEN HIVELY LOS ANGELES TIMES Albertson's said Bristol Farms would con- earlier, to $140 million from $334 million, was started in GOURMET OFFERINGS: tinue to be run by its current management, in part because of price cutting, promotions 1982 by Irving The deal for Bristol Farms is led by Chief Executive Kevin Davis. and other costs related to Albertsons' effort Gronksy and said to exceed $100 million For Albertson's, a Boise, Idaho-based to regain customers after the labor dispute. Mike Burbank af- chain with annual sales of $35 billion, the During the dispute, many shoppers ter they sold their successful meatpacking transaction provides entry into the gourmet- avoided the three major supermarket chains business. They opened the first store in food market, where profit margins are sub- and bought their groceries at smaller, spe- Rolling Hills Estates, naming it after a street stantially higher than the slim 1% to 2% cialty firms such as Bristol Farms, Trader in West Los Angeles, and adding the common in the supermarket business. Joe's, the Gelson's unit of Arden Group "Farms" to emphasize their fresh products. With its deep pockets, Albertson's is ex- Inc. and Whole Foods Market Inc. They sold the company in 1995 to an pected to expand the Bristol Farms fran- Bristol Farms gives Albertson's "the abil- investment firm named Kidd, Kamm & Co., chise. ity to operate smaller-format stores that dif- with financing from Oaktree, Greif said. "This acquisition is the latest example of ferentiate themselves not based on price, but Three years later, Oaktree — which now has our dedication to diversify into new formats based on quality, service and selection," $27 billion in assets under management — that can accelerate growth, tap into new said Lloyd Greif, president of Greif & Co., took over majority ownership of Bristol customer segments and maximize return on a Los Angeles investment bank that repre- Farms, he said. invested capital," Albertson's Chief Execu- sented Oaktree Capital. Albertsons' stock slipped a penny to tive Larry Johnston said in a statement. Bristol Farms offers meat, fish and poultry $23.95 a share Tuesday on the New York Albertson's has 2,500 retail stores in 37 and produce, as well as a large prepared- Stock Exchange. The acquisition was an- states, making it the nation's second-largest food and catering service that cooks up such nounced after the markets closed. conventional supermarket chain behind items as traditional cookies and full holiday Times staff writer Annette Haddad con- Kroger Co. Besides its namesake grocery meals — with upscale prices to match. tributed to this report. stores, Albertson's owns several drugstore Whether Albertson's applies its low-price chains, including Sav-on Drugs. formula to Bristol Farms remains to be seen. Albertson's has been waging an increas- But Davis said Bristol Farms itself experi-.

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