MONTVALE, NJ - Even before A&P announced its most recent bankruptcy, Kroger has been a name that some analysts have tossed around as a potential buyer for the 125 or more locations the retailer is selling.
Having already signed deals to sell locations to both Stop & Shop and ACME Markets, Brian Sozzi, CEO and Chief Equities Strategist of Belus Capital Advisors called Kroger the most logical candidate to buy some of the A&P stores that are still up for grabs.
Kroger doesn’t currently have stores in the Northeast, where A&P is located, and the company has not been shy about wanting to expand into new markets. Another 150 or so locations may still be on the chopping block, The Cincinnati Business Courier reports, most of which are located in New York, including New York City, Connecticut, and New Jersey. Sozzi says it could be a lucrative move for Kroger to enter New York, in particular.
Not all analysts are convinced the duo would make a good match, however. CEO Rodney McMullen has reportedly told The Cincinnati Business Courier that Kroger “doesn’t like acquiring supermarket chains that need to be fixed.” Kroger instead prefers to focus on acquiring already well-running companies. This can be evidenced by its 2014 purchase of North Carolina-based Harris Teeter.
Joseph Agnese, an analyst at S&P Capital IQ doesn't expect Kroger to buy many, however.
“I think of Kroger as more likely to be attracted to a stronger performer than a struggling chain,” he told The Cincinnati Business Courier. “I don’t see them going into a new market by buying a weaker franchise. They like to spread best practices from the companies they buy, and I don’t see that happening here.”
If Kroger acquired such a weak chain in the Northeastern market, the company may have a difficult time maintaining its success, Agnese suggests, adding that perhaps a better strategy for the company would be to buy a few fringe A&P stores to begin making inroads in that region.
As always, stay tuned to AndNowUKnow as we continue to update you on this story.
