Yesterday, we noted that in an interview with the Idaho Statesman, departing Albertsons CEO Larry Johnston offered perspective on his tenure as CEO with the company:
“Any regrets? No, I have really enjoyed my time at Albertsons. ... When we arrived in 2001, we found a large company reeling from a strained merger and in serious trouble. ... Over the past several years our team has executed the largest restructuring in the history of our industry by closing or selling over 600 underperforming stores that lost money, consolidating divisions from 20 to seven, re-engineering our technology infrastructure, eliminating redundant layers of management, removing over $1 billion in cost from the system and consummating the acquisition of Shaw's in New England.
“…During the most recent three fiscals years that the new leadership team has been in place (FY 2002, 2003, 2004) Albertsons outperformed our largest traditional grocery competitors in ... cumulative earnings, sales and free cash flow. ...
“I am very proud of what we accomplished, and I believe that with this transaction and this combination with Supervalu, the best is truly yet to come.”
Our comment:
We suspect that if you asked most of Albertsons employees, they’d respond that it was better for Johnston than it was for them.
In other words, they think they got screwed.
They’re just hoping that the new relationship with Supervalu is more mutually satisfying.
Not surprisingly, this all generated a fairly hefty volume of email.
One MNB user who asked to remain anonymous wrote:
Over its history, 4 men held the title of Chairman of the Board at Albertsons (Joe Albertson, Warren McCain, Gary Michael, & Larry Johnston). I worked under all 4 of them. It was a rewarding career until Johnston arrived. He just never got it! Each and every time he opened his mouth, he demonstrated he did not understand what his role was, which was to make the company more viable with consumers and thus more profitable. In his interview with the Idaho Statesman he gloats about his accomplishment such as consolidating divisions and eliminating layers of management. Did he realize in doing so that he was unable to lead the company to greater success? No! (It’s like someone being proud of the fact they have lost weight by chopping off their arms!)
There are many great people still with the company and with new leadership those people and the stores with prosper. Unfortunately, Larry Johnston left in his wake many “casualties” while furthering his personal fortune.
What kind of man is Larry Johnston? Well, when local TV station, KTVB, aired an interview where a financial analyst called him and the Board “quitters”, he cancelled his appointment with KTVB for an interview later in the day and would not allow them in the press conference held later in the day. I guess he didn’t have a good rebuttal to the charge he’s a quitter!
Guess he won’t be talking to us, either…
Another MNB user wrote:
Another great comment from Larry. Not one word about increasing shoppers, only the fact he increased revenue by increasing prices. Let's look at his true measure of shoppers per year per building, as basket dollars and sales dollars hide the true "fact".
They lost customers and focus and hid behind increasing prices on the shelf.
Another Albertsons employee who is an MNB user wrote:
Please keep us informed as to where this character will be going to, so we don’t apply for jobs there….
This is just a guess, but we don’t think that Johnston’s next job will be in retailing. First of all, who would hire him? Secondly, he’d probably run from another retail gig as fast as he could.
Which segues nicely into a comment from another MNB user:
Just once I want to hear one of these millionaire retirees say, "Holy smokes! Running a supermarket chain is way tougher than it looks! Believe you me--I'm a pretty sharp guy and even I couldn't figure it out…”
Makes you realize how smart people like Danny Wegman and Norman Mayne and Bobby Ukrop and other people like that really are.
Storm clouds remain on the horizon, however, as one MNB user wrote:
Being an employee for Albertson's in the Rocky Mountain Division we all here hope that good and much needed changes will come. But in a reality check here, most of us are ready for the closure of this division or the selling off of some of that land some stores are on.
When Joe Albertson was alive and building up his company, he purchased the land for a lot of the stores. Supervalu had grocery stores here called Cub Foods and they bellied up. What we see is a salvage team buying the company. We don’t expect Albertson's will be around much longer here. The midwest lacks what the east and west has and that be population. They bit off more then they can chew with the purchases of other grocery chains instead of just concentrating on just Albertson's. Sure, good ol Larry is proud of all his so called accomplishes. If he's so proud, then why did the company get put up for sale then? These accomplishments should have made the company stronger not week. It was all pre planned out when he stepped in from the get go (sale wise). He concentrated on everything else but the stores themselves and the employees (remodeling wise). Yea, we all got screwed basically but one good thing is he's out the door. One bad thing is with millions of dollars too. Id like to know what I contributed to his financial status.
And yet another MNB user wrote:
Larry touted the "free cash flow" metric as something he was especially proud of.
No doubt since most of the free cash flow went straight into his pocket at the expense of customers and Albertsons associates.
Nice work if you can get it.
We joked the other day that Johnston probably was singing “Turn out the lights, the party’s over” these days.
But one MNB user thought it was a different tune he was singing:
”Go on take the money and run…”
MNB user Tom Murphy brought a different perspective, however:
While not defending the actions of Albertson's executive team, especially Larry Johnston, the problem is not just management...it ties to an article at the beginning of this edition of MorningNewsBeat detailing the competitiveness brought on by offshoring and the global economy (see the presentation by Fortune magazine’s senior editor-at-large Geoffrey Colvin at FMI Midwinter).
There is probably not room enough in the U.S. for three "vanilla" grocers. Albertsons didn't need to outperform Wal-Mart, only Safeway and/or Kroger. This, they could not do. Therefore, just like in the jungle, the rule of "survival of the fittest" was applied. I don't like seeing executives, managers, line supervisors, and general workers lose their jobs; however, to compete in the global economy you must change the fundamentals...Larry tried and failed. I'm not sure Supervalu has any greater chance. At some point in time, we as an industry just might have to admit that our fundamentals are flawed and we have too much sales floor to service our markets!
“Any regrets? No, I have really enjoyed my time at Albertsons. ... When we arrived in 2001, we found a large company reeling from a strained merger and in serious trouble. ... Over the past several years our team has executed the largest restructuring in the history of our industry by closing or selling over 600 underperforming stores that lost money, consolidating divisions from 20 to seven, re-engineering our technology infrastructure, eliminating redundant layers of management, removing over $1 billion in cost from the system and consummating the acquisition of Shaw's in New England.
“…During the most recent three fiscals years that the new leadership team has been in place (FY 2002, 2003, 2004) Albertsons outperformed our largest traditional grocery competitors in ... cumulative earnings, sales and free cash flow. ...
“I am very proud of what we accomplished, and I believe that with this transaction and this combination with Supervalu, the best is truly yet to come.”
Our comment:
We suspect that if you asked most of Albertsons employees, they’d respond that it was better for Johnston than it was for them.
In other words, they think they got screwed.
They’re just hoping that the new relationship with Supervalu is more mutually satisfying.
Not surprisingly, this all generated a fairly hefty volume of email.
One MNB user who asked to remain anonymous wrote:
Over its history, 4 men held the title of Chairman of the Board at Albertsons (Joe Albertson, Warren McCain, Gary Michael, & Larry Johnston). I worked under all 4 of them. It was a rewarding career until Johnston arrived. He just never got it! Each and every time he opened his mouth, he demonstrated he did not understand what his role was, which was to make the company more viable with consumers and thus more profitable. In his interview with the Idaho Statesman he gloats about his accomplishment such as consolidating divisions and eliminating layers of management. Did he realize in doing so that he was unable to lead the company to greater success? No! (It’s like someone being proud of the fact they have lost weight by chopping off their arms!)
There are many great people still with the company and with new leadership those people and the stores with prosper. Unfortunately, Larry Johnston left in his wake many “casualties” while furthering his personal fortune.
What kind of man is Larry Johnston? Well, when local TV station, KTVB, aired an interview where a financial analyst called him and the Board “quitters”, he cancelled his appointment with KTVB for an interview later in the day and would not allow them in the press conference held later in the day. I guess he didn’t have a good rebuttal to the charge he’s a quitter!
Guess he won’t be talking to us, either…
Another MNB user wrote:
Another great comment from Larry. Not one word about increasing shoppers, only the fact he increased revenue by increasing prices. Let's look at his true measure of shoppers per year per building, as basket dollars and sales dollars hide the true "fact".
They lost customers and focus and hid behind increasing prices on the shelf.
Another Albertsons employee who is an MNB user wrote:
Please keep us informed as to where this character will be going to, so we don’t apply for jobs there….
This is just a guess, but we don’t think that Johnston’s next job will be in retailing. First of all, who would hire him? Secondly, he’d probably run from another retail gig as fast as he could.
Which segues nicely into a comment from another MNB user:
Just once I want to hear one of these millionaire retirees say, "Holy smokes! Running a supermarket chain is way tougher than it looks! Believe you me--I'm a pretty sharp guy and even I couldn't figure it out…”
Makes you realize how smart people like Danny Wegman and Norman Mayne and Bobby Ukrop and other people like that really are.
Storm clouds remain on the horizon, however, as one MNB user wrote:
Being an employee for Albertson's in the Rocky Mountain Division we all here hope that good and much needed changes will come. But in a reality check here, most of us are ready for the closure of this division or the selling off of some of that land some stores are on.
When Joe Albertson was alive and building up his company, he purchased the land for a lot of the stores. Supervalu had grocery stores here called Cub Foods and they bellied up. What we see is a salvage team buying the company. We don’t expect Albertson's will be around much longer here. The midwest lacks what the east and west has and that be population. They bit off more then they can chew with the purchases of other grocery chains instead of just concentrating on just Albertson's. Sure, good ol Larry is proud of all his so called accomplishes. If he's so proud, then why did the company get put up for sale then? These accomplishments should have made the company stronger not week. It was all pre planned out when he stepped in from the get go (sale wise). He concentrated on everything else but the stores themselves and the employees (remodeling wise). Yea, we all got screwed basically but one good thing is he's out the door. One bad thing is with millions of dollars too. Id like to know what I contributed to his financial status.
And yet another MNB user wrote:
Larry touted the "free cash flow" metric as something he was especially proud of.
No doubt since most of the free cash flow went straight into his pocket at the expense of customers and Albertsons associates.
Nice work if you can get it.
We joked the other day that Johnston probably was singing “Turn out the lights, the party’s over” these days.
But one MNB user thought it was a different tune he was singing:
”Go on take the money and run…”
MNB user Tom Murphy brought a different perspective, however:
While not defending the actions of Albertson's executive team, especially Larry Johnston, the problem is not just management...it ties to an article at the beginning of this edition of MorningNewsBeat detailing the competitiveness brought on by offshoring and the global economy (see the presentation by Fortune magazine’s senior editor-at-large Geoffrey Colvin at FMI Midwinter).
There is probably not room enough in the U.S. for three "vanilla" grocers. Albertsons didn't need to outperform Wal-Mart, only Safeway and/or Kroger. This, they could not do. Therefore, just like in the jungle, the rule of "survival of the fittest" was applied. I don't like seeing executives, managers, line supervisors, and general workers lose their jobs; however, to compete in the global economy you must change the fundamentals...Larry tried and failed. I'm not sure Supervalu has any greater chance. At some point in time, we as an industry just might have to admit that our fundamentals are flawed and we have too much sales floor to service our markets!
- KC's View:
