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Roundy's

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Roundy's Supermarkets
Company typePrivate
IndustryRetail (Grocery)
Founded1872
HeadquartersMilwaukee, Wisconsin
Key people
Robert A. Mariano, Chairman & CEO
ProductsBakery, dairy, deli, frozen foods, general grocery, meat, pharmacy, produce, seafood, snacks
RevenueUSD 3.9 billion (2006)
Number of employees
18,000
Websitewww.roundys.com
The Roundy's Commissary, a food production facility in Kenosha, Wisconsin.

Roundy's Supermarkets (Roundy's) is a Milwaukee, Wisconsin-based supermarket chain with 154 stores in Minnesota and Wisconsin,[1] and one store in Illinois.[2] Based on 2006 fiscal year estimated sales of $3.9 billion, Roundy's is ranked as number 33 among "Top 75 North American Food Retailers" for the 2007[3] and as the seventy-eighth largest retailer in the United States.[4]

Roundy's operates under the names Pick 'n Save in Wisconsin (founded in 1975)[1], Rainbow Foods in the Minneapolis-St. Paul region (acquired in 2003)[2], Copps Food Center in Wisconsin (acquired in 2001)[3], Metro Market (a pilot concept store in downtown Milwaukee, opened in 2004)[4], and Mariano's Fresh Market in Illinois.[5]

Roundy's operates three main distribution centers located in Stevens Point, WI, Mazomanie, WI, and Oconomowoc, WI. Roundy's continues to operate Copps Food Center out of its Stevens Point headquarters.

History

The company was founded in 1872 in Milwaukee, Wisconsin as Smith, Roundy & Co. by William E. Smith, Judson Roundy and Sidney Hauxhurst. Over the years it has also operated as the Roundy, Peckham & Co. and Roundy, Peckham & Dexter Co.

Roundy's was a major warehouse distributor to non-company supermarkets, including IGA, but it has moved out of the wholesale market to focus on retail.

In 2004 Roundy's had revenues of over $4.77 billion. It dropped out of the Fortune 500 list in 2006.

The Pick 'n Save chain, which was the backbone and propellant for growth and sale of the company in 2002, was the prodigy of two Kroger educated marketers [citation needed]. Vincent R. Little and Michael D. McGee, the fathers of Pick 'n Save, came up through the ranks at The Kroger Company.

Roundy's saw rapid growth during the John Dickson years. Dickson became sick and handed the reins to Gerald F. Lestina. On Lestina's watch the company built only one corporate store, at the fairgrounds in Oshkosh, Wisconsin over a period of 7 years. That store was then sold years later to a director, George Prescott, for approximately $ 1.1 million although the board of directors had been told the price was $ 5 million.

In 2002, Roundy's was taken private through a purchase by the Chicago private-equity firm Willis Stein & Partners. A strong effort was made in 2007 to sell Roundy's, but because of the softness in the credit markets there were no takers. Rumors have swirled from time to time regarding a possible sale of Roundy's to Cincinnati-based Kroger in conjunction with some or all of Safeway-owned and Chicago-based Dominick's stores.[5]

The current lCEO is "Chairman Bob" Robert Mariano, who was the CEO of Dominick's prior to Dominick's sale to Safeway in 1998. Most of Mariano's senior staff at Roundy's held the same positions with Mariano at Dominick's.


Retail Banners

A Pick 'n Save store in Sheboygan, Wisconsin.

Roundy's operates stores using 5 distinct banners. They are Pick N Save, Copp's, Rainbow Foods, Metro Market, and Mariano's Fresh Market. Within the store, three of those banners are practically identical in merchandising style and strategy, while Metro Market and Mariano's offer more urban-upscale product offering with modern fixturing and amenities.

All stores carrying the Pick N Save banner are located south and east of a line from Madison to Green Bay, Wisconsin.[citation needed] All Copp's stores are located in Wisconsin north and west of the line described. All Rainbow Foods stores are located in Minnesota and within the Twin Cities metro area. Mariano's Fresh Market is in the Chicago area.

Corporate Office Layoffs

On January 19, 2010, a round of layoffs occurred at the corporate headquarters in Milwaukee. 62 full-time employees were released due to "economic conditions" as stated by Roundy's public relations official Vivian King. The layoffs affected all departments housed at the downtown Milwaukee office and were effective immediately. No other information was forthcoming concerning any store impacts or future potential layoffs.


Adding to the controversy Willis Stein & Partners (who owns Roundy's), a Chicago-based private equity firm that buys and sells companies for profit, will be taking more money out of Roundy’s.

Roundy’s has excess capital on its balance sheet, which Chicago-based Willis Stein plans to absorb in the form of a $75 million dividend recapitalization. Thanks to the excess cash Roundy’s leverage ratio of 3.1x debt-to-EBITDA will not change following the transaction. The company, with $728.5 million in debt, generates about $235 million in annual EBITDA. On March 29, 2010, it was announced that Willis Stein has taken a $150 million dividend (instead of the previous estimate of $75 million) for its ownership of Roundy's. This was accomplished by having Roundy's borrow the sum against its physical assets. As a result both Moody's and Standard and Poor's revised their credit ratings for Roundy's due to the added debtload.

The $75 million dividend comes on top of the $270 million that Willis Stein has already earned on the company through a previous recap, a 2006 deal in which the firm recouped 120 percent of its $225 equity million investment.

Competition

Milwaukee Area

New competitors for Pick 'n Save stores in the Milwaukee market in 2008 include a Woodman's Food Market in the suburb of Oak Creek, Wisconsin. Woodman's is a large store focused on variety and price. The company plans to open another store in Menomonee Falls in late 2010, and has had a store in Kenosha for many years.[6]

Also, Wal-Mart has opened supercenters with full grocery selections in the communities of Germantown, Mukwonago, Sturtevant, West Bend, Hartford, and Milwaukee. The store in Franklin is set to begin conversion in December 2008. New supercenters will soon be constructed in Muskego and Waukesha[7]. The chain also hopes to convert its Delafield discount store into a supercenter.[8]

Costco Wholesale recently entered the market with a store in Grafton.

Sendik's Food Market, a local, high-end food market, also competes with Pick 'n Save, and has slowly expanded further using former Kohl's and Jewel-Osco locations to expand within the suburban fringes of the area. A long time retailer on Milwaukee's north side, Lena's Food Markets(Piggly Wiggly), has used the same strategy to expand within Milwaukee proper.

Minneapolis-St. Paul Area

In the Twin Cities market, Roundy's owned Rainbow Foods is a distant second in the marketplace to Supervalu owned Cub Foods. Other competitors, including SuperTarget, Costco, and Wal-Mart Supercenters continue to gain ground against Rainbow.

Elsewhere

In northern Wisconsin, independents such as Festival Foods along with Wal-Mart Supercenters have seriously impacted Roundy's stores throughout the Fox River Valley region.[citation needed]

Roundy's operate 27 Copps Food Centers in Wisconsin, outside the Milwaukee area, according to the company Website.

References

  1. ^ About Roundy's, Roundy's Supermarkets. Last accessed July 20, 2009.
  2. ^ Doris Hajewski (July 24, 2010). "Roundy's opens door to Chicago market". Milwaukee Journal Sentinel. Retrieved 2010-07-30.
  3. ^ 2007 Top 75 North American Food Retailers, Supermarket News, Last accessed February 20, 2008.
  4. ^ Top 100 Retailers, STORES’ annual report on the nation’s retail Power Players, Stores, July 2007. Last accessed February 20, 2008
  5. ^ Journal SentinelRoundy's For Sale?
  6. ^ http://www.jsonline.com/business/38008729.html
  7. ^ http://www.jsonline.com/business/35538259.html
  8. ^ http://www.jsonline.com/business/40385237.html