Noddle Makes the Right Moves
By George Anderson
Welcome to Mr. Anderson’s retail neighborhood. The lesson for today, children, is don’t bet against Supervalu’s chief executive officer Jeff Noddle.
As a piece in the Minneapolis Star Tribune points out, ever since Mr. Noddle took over the company from Mike Wright in 2001, he has made decisions that have been questioned
by members of the financial analyst community.
First, Mr. Noddle made the decision to walk away from the company’s distribution agreement with Kmart, even though that chunk of business represented 12 percent of Supervalu’s
total sales.
As everyone knows, Fleming picked up what Mr. Noddle and company walked away from. It and Kmart eventually went bankrupt.
“The decision you make to get out of something is harder than to get into something,” Mr. Noddle told the Star Tribune. “It’s always more fun to stand before [analysts
and the news media] and say we are getting into something exciting. But if we can’t find a theoretical plan to success, we have an obligation on behalf of our shareholders to
take action even though it’s painful in the short term.”
It was the obligation that Mr. Noddle speaks of that led to his decision to trade Supervalu’s New England distribution business with C&S Wholesale for Fleming’s Midwest operations.
C&S bought Fleming operations after the wholesaler declared bankruptcy.
Analysts have expressed concern about the swap of distribution centers because Supervalu will lose about $400 million in yearly sales. The decision will ultimately make Supervalu
more efficient and increase profits, reasons Supervalu’s chief.
It’s hard to question the Supervalu strategy when profits were up 26 percent in the last quarter, even if its wholesale division’s sales were down seven percent.
The company has reinvested its additional earnings into concepts, such as the fast growing Save-A-Lot limited assortment format. Save-A-Lot now numbers about 1,200 stores and,
as the Star Tribune article points out, many think the company can at least double that number in the next few years.
Bill Moran, Save-A-Lot’s founder and CEO, said, “Jeff has been very supportive of our growth. The company has made capital available to us. But Jeff has also been aware of keeping
Save-A-Lot independent. He recognizes the things that are critical to Save-A-Lot’s long-term success.”
Moderator’s Comments: Who gets your vote for the best chief executive in the retail business? Why?
Jeff Noddle is clearly one of the best, if not the best, chief executives in the grocery business.
Another testament to his leadership is that Supervalu has maintained good relations with the United Food and Commercial Workers (UFCW) while other supermarkets
are seemingly in a market-by-market battle with the labor union.
Bernie Hesse, an organizer with the United Food and Commercial Workers Local 789 in St. Paul, offered this assessment of Jeff Noddle. He “has been good
at recognizing where [Supervalu’s] strengths are and getting the hell out of markets where they can’t make it. The company has been very surgical and makes decisions with no ego.”
–
George Anderson – Moderator