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.
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.