Slow Transition Seen at Save Mart

ELLIOT ZWIEBACH

MODESTO, Calif. — Save Mart Supermarkets here views its pending purchase of 132 Albertsons stores in northern California and northern Nevada as a merger, not as a buyout or a takeover, Bob Spengler, who recently returned to Save Mart as president and chief operating officer, told SN last week.

“We're not going to ride in on a white horse as saviors,” he explained, “because it's a profitable company that already has a very good team in place, and we don't plan to do anything of any magnitude to interfere with that.

“In fact, when the deal closes [around March 1], the stores will look and feel like Albertsons, though we will be responsible for the sales, profits and payroll. Our immediate goal will be to get a better understanding of what they're doing, and then fold their operation into our operation.”

Spengler retired from Save Mart at the beginning of 2006 after 19 years with the company and an industry career of more than 50 years. “But I told Bob [Piccinini, chairman and chief executive officer of Save Mart] that I would come back if the company made an acquisition and felt it needed me,” he told SN.

He rejoined the company last September as Piccinini was negotiating the terms of the Albertsons deal.

The first order of business will be to put together transition teams consisting of personnel from both Save Mart and Albertsons, he said, “and if that happens as we hope it will, there will be as many people from their side as from our side. But until the deal closes, we won't have an opportunity to see who's there.”

Save Mart, which operates stores throughout California's Central Valley, said in November it would purchase the entire northern California division of Albertsons — a group of 132 stores (including 10 in Nevada) that were sold to Albertsons LLC in mid-2006 as part of its purchase of underperforming divisions of Boise, Idaho-based Albertsons. The best-performing Albertsons divisions were sold to Minneapolis-based Supervalu.

Save Mart operates 124 stores; following the purchase, that number will increase to 256, with combined sales approaching $5 billion.

Spengler declined to indicate the price Save Mart is paying for the stores.

He said Save Mart anticipates the deal will close around Feb. 23, though it could close as late as March 1. “Right now we're in a lull,” he noted.

Save Mart's attorneys are talking with the Federal Trade Commission, Spengler said, “and while the FTC has some questions, we don't anticipate any problems there because there's very little crossover between the two operations.”

The deal will move Save Mart into several new operating areas, Spengler said: into northern Nevada for the first time; into the San Francisco Bay Area proper; into Carmel and Monterey along California's central coast; and into parts of northern California stretching from Sacramento to the Oregon border. (Save Mart operates FoodMaxx price-impact stores as far north as Redding, close to the Oregon border, but no Save Mart stores, Spengler pointed out.)

The biggest challenge facing Save Mart at this point, he said, is changing the Albertsons software. “The deal didn't include the proprietary software, which is being supplied to Albertsons by Supervalu, and our IT department is working on changing the software,” he explained.

“Supervalu has agreed to keep us going for six months after the deal closes, after which we will have to supply our own software, which will also require us to change some of the hardware,” Spengler added.

He said Save Mart plans to change the names on the Albertsons stores, though it hasn't decided what names to use on which stores. “We won't make those decisions till we have a chance to talk to the Albertsons people and identify the pros and cons of each potential name,” he explained.

The choice of names includes Save Mart, the chain's conventional banner; FoodMaxx, its price-impact banner; and Lucky Stores, a banner that the original Albertsons acquired in 1999 (though a legal challenge to Albertsons' right to the name is pending in the courts).

“At this point we don't know what we will do with the Lucky name,” Spengler said.

During his brief retirement, Spengler, now 67, said he had “a great time getting reacquainted with my wife and taking a lot of road trips with a friend, and I also bought a cabin in the mountains. But when you work for a company like Save Mart, with the type of people they have here, and when you've been in this industry as long as I have, it's difficult to walk away.”

Walking into the office for the first time after his retirement, “it felt like no time had passed since I left,” he told SN.