Thom Guidi, CFA, recently spoke with Steve Watkins of the Cincinnati Business Courier about how the potential merger between Kroger Co. and Albertsons Cos.
Below are excerpts from the article:
Kroger’s ever-subdued Rodney McMullen calls the Cincinnati grocer’s $25 billion plan to buy rival Albertsons a “major milestone,” but that still might be one of the biggest understatements the CEO has made in his nine years at the helm…
“A national footprint may be exactly what they need to compete with Walmart in the future,” said Thom Guidi, investment manager at Kenwood-based investment advisory firm Foster & Motley. “They’re not thinking just a couple years ahead. They’re thinking far ahead about how you compete with the behemoths.” …
It’s also an opportunity to greatly expand Kroger’s store brands, which it calls Our Brands. Kroger has emphasized that high-margin business for years and generates $28 billion in annual sales in that sector. Albertsons’ in-house brands are also robust. The combination would put stores brands at $43 billion in sales a year, making Kroger 2.0 one of the largest consumer product companies.
“I think they’re better at that than just about anybody,” Guidi said.
Kroger has been a leader in gathering and utilizing data on its customers to personalize offers and market digital information to others.
“I’m pretty sure Kroger knows more about me than my wife,” Guidi said. “They know what we buy and how often we buy it.”
Click here to read the full article (a subscription may be required).