Why Did SUPERVALU’s stock rise by 11.2% on August 15?
SUPERVALU to become The Fresh Market’s primary distributor
SUPERVALU operates one of the largest US discount grocery chains by store count through its Save-A-Lot segment. It’s also one of the largest wholesale distributors to independent retail customers in the country.
SVU is set to become The Fresh Market’s primary distributor upon the transition of TFM’s current distributor relationships. The company will supply TFM with a range of traditional and signature grocery products. These will primarily include meat, deli, bakery, grocery, frozen foods, and dairy.
ETF investors seeking to add exposure to SVU can consider the iShares Morningstar Small-Cap Value ETF (JKL), which invests 0.28% of its portfolio in the company.
A new course of action for The Fresh Market
The Fresh Market was acquired by Apollo Global Management (APO) in March 2016. The company had been struggling with its sales comps and margins on account of rising competition from smaller companies such as Sprouts Foods Market (SFM) on one hand and retail giants such as Kroger (KR) and Walmart (WMT) on the other.
TFM’s current supply contract with SUPERVALU is one of the first few signs of a change in direction for the company under the leadership of Apollo Global.
“We are excited about this relationship with SUPERVALU,” said The Fresh Market’s president and CEO Rick Anicetti. “SUPERVALU’s experience in wholesale grocery and logistics capabilities aligns well with our strategic vision and will make them a valuable strategic partner for our future. This new relationship will be highly beneficial in enhancing our customer experience, with a focus on providing superior quality and freshness at a greater value.”
Read on to learn more about the agreement and its importance to SUPERVALU.