Grocery-retailer Albertsons Companies is making another attempt to go public, after shelving an IPO in 2015 due to poor market conditions. Albertsons' draft "S-1" registration statement, filed with the SEC on Friday, reveals an offering of $100 million in common stock and $100 million in convertible preferred shares. It intends to list on the New York Stock Exchange under the symbol "ACI."
Following a merger with mammoth grocery chain Safeway in 2015, Albertsons now operates 20 retail brands across 2,260 stores located in 34 states and the District of Columbia.
The company's S-1 states that Albertsons won't receive any proceeds from the offering. Rather, selling shareholders, including private equity firm Cerberus Capital Management, will have an opportunity to cash out their investments.
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Albertsons' financials reflect the evolving and always competitive retail grocery channel. In the first 40 weeks of fiscal 2019, it generated net income of just $399 million on $47 billion in sales, reflecting a profit margin of 0.8%.
Such profitability is meager even by grocery-industry standards. Albertsons' margins are partially hobbled by high interest expense stemming from $8.6 billion in debt. To its credit, the company has reduced total debt from a level of $12.2 billion immediately following the Safeway acquisition. And Albertsons does have one significant growth opportunity: Despite its national scale, it has yet to enter the competitive but lucrative Southeastern U.S. market.
Though Albertsons is again listing in a weak stock market environment, the grocery industry still generates interest: none other than Berkshire Hathaway recently disclosed an equity stake in Kroger, the nation's largest pure-play grocer. As prospective investors scour Albertsons' S-1 statement in the coming weeks, the company undoubtedly hopes that the second time will be the charm.
