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AGGRESSIVE ACQUISITIONS DRIVE SET BY ALBERTSON'S

BOISE, Idaho -- Albertson's here plans to be more aggressive in seeking out new growth opportunities after losing out on some potential acquisitions, Gary G. Michael, chairman and chief executive officer, told members of the media following the company's annual meeting here.Although Michael did not pinpoint any missed acquisitions, trade observers said the chain had hoped to acquire Quality Food Centers,

David Procter

June 1, 1998

2 Min Read
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DAVID PROCTER

BOISE, Idaho -- Albertson's here plans to be more aggressive in seeking out new growth opportunities after losing out on some potential acquisitions, Gary G. Michael, chairman and chief executive officer, told members of the media following the company's annual meeting here.

Although Michael did not pinpoint any missed acquisitions, trade observers said the chain had hoped to acquire Quality Food Centers, Bellevue, Wash., last fall, before QFC was sold to Fred Meyer Inc., Portland, Ore. Michael's comments amounted to a reaffirmation of Albertson's recent strategy toward growing through acquisitions following the company's long focus on relying solely on new store development.

During the meeting, Michael said he expects industry consolidation to continue, and since Albertson's has no intention of being acquired, it will pursue any growth opportunity that makes sense.

Among the chain's recent acquisitions, he noted, were the purchase of 10 Seessel's stores in Memphis, Tenn., and 10 Smitty's stores in Missouri; still awaiting approval by the Federal Trade Commission is the acquisition of 43 stores in Montana, Wyoming and North Dakota from Buttrey Food & Drug Stores Co., Great Falls, Mont.

Acquiring stores is much less costly than building stores in a new marketing area, Michael said. Citing Albertson's entry into Phoenix and Houston in the past decade, he said, "Those stores were built from scratch, and it was very expensive.'

However, the acquisition of Seessel's, Smitty's and Buttrey units gives the chain an instant presence in three new markets, and although each will retain its original name, "they will be Albertson's on the inside," Michael said, including the chain's private-label lines and management style.

In the 14 weeks since Albertson's took over Seessel's, sales have increased, Michael told shareholders, although he did not elaborate.

Despite the more aggressive stance on acquisitions, Albertson's isn't easing on its commitment to new store openings. Michael said Albertson's has opened 15 new stores, exclusive of acquisitions, this year and plans to open 50 more new stores by the end of the fiscal year and a total of 380 new units by 2002.

The Smitty's acquisition added two more fuel centers to the five Albertson's already operates, he said, and the company expects to have 50 fuel centers operating by the end of the year.

During the meeting, Michael told shareholders Albertson's has launched an open test of Internet shopping in the Dallas/Fort Worth Metroplex and said the company would soon have a larger presence in cyberspace. The site, www.albertson's.com, is still in development, officials said. The company will decide whether to roll out the service to other markets based on the results of the test.

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