News

Deflation Eats into the Supermarket Business

Supermarkets have revised their earnings downward due to pressure from competition and food price deflation.

The upheaval has led to at least one business sale within the sector and others may be in the works.

Read this excerpt from an Oct. 24 marketrealist.com article:

This year has been difficult for supermarket stocks. All the major supermarket chains are in the red. Whole Foods Market (WFM), Kroger (KR), Sprouts Farmers Market (SFM), and Supervalu (SVU) are sitting at year-to-date (YTD) losses of 16%, 26%, 20%, and 33%, respectively, as of October 21, 2016....
A challenging operating environment and declining same-store sales have led to supermarkets selling either part or all of their companies. In March, Apollo Global Management, LLC (APO) purchased The Fresh Market as the company was unable to keep pace with the rising competition.
On October 17, Supervalu (SVU) announced the sale of Save-A-lot, its discount grocery chain, to Onex Corporation for $1.37 billion. The company plans to repay its debt using the deal proceedings.
Rumors about Kroger's interest in purchasing Whole Foods floated in the market on October 6. The takeover speculations boosted the share price of Whole Foods. However, none of the companies commented on the rumors.
Kroger has been very active in identifying cheaply valued grocery players in order to expand its business. Roundy’s, Vitacost, and Harris Teeter are some of its recent acquisitions.

You can read the entire article by following the link below:

http://marketrealist.com/2016/10/why-competition-and-deflation-hurt-supermarket-stocks-like-wfm/