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In Midst of Market Turmoil, Grocery Chain Albertson's Files for IPO

By James Brumley - Updated Mar 9, 2020 at 5:16PM

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Its parent company tries again after cancelling previous public offering plans in 2018.

On Friday, privately owned grocery store chain Albertson's filed long-expected paperwork with the Securities and Exchange Commission, seeking to become a publicly traded company. Parent company Cerberus Capital Management has yet to name an issue price or determine the total amount of funds to be collected, but the process has begun.

The words "Initial Public Offering" in raised letters on a wood background.

Image source: Getty Images.

The timing is less than ideal. Already reeling from a two-week sell-off stemming from coronavirus fears, the market took its biggest single-day hit in years on Monday. The S&P 500 was down on the order of 7% a couple of different times during the first trading day back from a weekend that did little to alleviate investors' COVID-19 concerns. The poor market environment itself won't prevent the grocery chain from moving forward with its public offering plans, but it could dampen investor interest in any new investment.

Or, perhaps that disinterest doesn't apply to consumer staples names like Albertson's. Shares of grocery rival Walmart (WMT 0.08%) proved resistant to coronavirus worries, moving up slightly on Monday, with investors seeing it as a beneficiary of demand for protective measures against the spread of the flu-like disease. Namely, it's a key seller of goods like hand sanitizer and bottled water. Shares of Clorox, the maker of bleach and other cleaning supplies, were also in the black on Monday.

Even without being a possible beneficiary of the coronavirus outbreak, Albertson's offers growth to prospective buyers. Not only is the grocery chain profitable, but EBITDA during the three quarters that ended in November was up more than 3% year over year.

Albertson's operates more than 2,200 stores. For perspective, Kroger (KR 1.51%) owns almost 2,800 stores.

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Stocks Mentioned

The Kroger Co. Stock Quote
The Kroger Co.
KR
$48.45 (1.51%) $0.72
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$123.72 (0.08%) $0.10
The Clorox Company Stock Quote
The Clorox Company
CLX
$140.75 (0.46%) $0.64

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