American Stores Company was an American
public corporation
A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange (l ...
and a
holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
which ran
chains
A chain is a serial assembly of connected pieces, called links, typically made of metal, with an overall character similar to that of a rope in that it is flexible and curved in compression but linear, rigid, and load-bearing in tension. A c ...
of
supermarket
A supermarket is a self-service Retail#Types of outlets, shop offering a wide variety of food, Drink, beverages and Household goods, household products, organized into sections. This kind of store is larger and has a wider selection than earli ...
s and
drugstores
A pharmacy (also called "drugstore" in American English or "community pharmacy" or "chemist" in Commonwealth English, or rarely, apothecary) is a retail shop which provides pharmaceutical drugs, among other products. At the pharmacy, a pharmacis ...
in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
from 1917 through 1998. The company was incorporated in 1917 when
The Acme Tea Company merged with four small
Philadelphia
Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Sinc ...
-area grocery stores ''(Childs, George Dunlap, Bell Company,'' and ''A House That Quality Built)'' to form American Stores. In the following eight decades, the company would expand to 1,575 food and drugstores in 38 states with $20 billion in annual sales in 1998.
History
By 1925, American Stores had grown from five supermarkets in 1917 to nearly 1,800 stores. In 1946, a proposed acquisition of ''Grand Union'' supermarkets was turned down by Grand Union stockholders.
1960s-1970s
In 1961, American Stores company acquired
California
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
's
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
chain of supermarkets. In the 1970s, in order to compete with lower priced grocery retailers such as
ShopRite and
Pathmark
Pathmark is a supermarket brand owned by Allegiance Retail Services, a retailers’ cooperative based in Iselin, New Jersey, USA. Pathmark currently has one location in East Flatbush, Brooklyn, New York, which it has operated since 2019.
From 1 ...
(competitors which did not offer
trading stamps
Trading stamps are small paper stamps given to customers by merchants in loyalty programs that predate the modern loyalty card. Like the similarly-issued retailer coupons, these stamps only had a minimal cash value of a few mils (thousandths of a ...
),
Acme Markets
Acme Markets Inc. is a supermarket chain operating 161 stores throughout Connecticut, Delaware, Maryland, New Jersey, the Hudson Valley of New York, and Pennsylvania and, as of 1999, is a subsidiary of Albertsons, and part of its presence in t ...
launched its
Super Saver discount grocery chain in
Pennsylvania
Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
.
American Stores itself was acquired in 1979 by the
Skaggs Companies, Inc., which adopted the American Stores Company name, and relocated the company headquarters to
Salt Lake City, Utah
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
.
American Stores was by far the larger organization, with 758 supermarkets, 139 drugstores, 53 restaurants, and 9 general merchandise stores in nine states when compared to the 241 ''Skaggs'' stores. Although the resulting entity bore the American Stores Company name, it was controlled by Skaggs management headed by Leonard S. Skaggs Jr. more familiarly known as
Sam Skaggs. Stores in several markets having both an
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
supermarket and a
Skaggs Drug Center drugstore presence were combined (or expanded) to combination food and drug stores and re-branded ''Skaggs Alpha Beta''.
* In 1977, the Skaggs Companies, Inc. had amicably dissolved a partnership started in 1969 with the
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
supermarket chain which pioneered the first combination grocery/drug with stores named ''Skaggs Albertsons''.
1980s
American Stores posted $83 million in earnings on sales of nearly $8 billion in 1983. But its presence was still weak in the midwest, New England, and Florida. To help overcome these remaining geographical shortcomings,
Sam Skaggs made another attempt to merge with the
Jewel Companies
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwes ...
, Inc. in 1984.
* In 1978, Skaggs Companies, Inc., originally had worked out an agreement to merge with Jewel Companies Inc., but the merger was torpedoed at the last minute when some of Skaggs's directors, concerned that they would lose their autonomy under the deal, failed to approve it.
Acquisition of the Jewel Companies
The
Jewel Companies
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwes ...
, Inc. chairman Weston Christopherson was opposed to a merger and
Sam Skaggs was forced to engineer a
hostile takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
. On June 1, 1984, American Stores tendered an offer worth $1.1 billion for 67 percent of Jewel's outstanding shares at $70 per share.
For two weeks, the Jewel Companies, Inc. management refused all comment on the offer, maintaining its silence even at a stormy shareholder's meeting before which Jewel shareholder groups controlling 20 percent of the company's stock had come out in favor of negotiating with American Stores. Finally, on June 14, Sam Skaggs and Jewel president Richard Cline reached an agreement after an all-night bargaining session. American Stores raised its bid for Jewel's preferred stock, increasing the total bid to $1.15 billion in cash and securities. In return, Jewel dropped plans for a defensive acquisition of ''Household International Inc''. and accepted American Stores' offer. To help raise cash for the deal, American Stores sold its ''Rea and Derick, Inc.'' subsidiary comprising 134 drugstores in December 1984 to
People's Drug, a division of ''Imasco Limited''. 33
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
grocery stores in
Arizona
Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Fou ...
sold to
ABCO Foods
ABCO Foods was a chain of grocery stores in Phoenix and Tucson, Arizona for over 15 years, formed from a 1984 spin-off sale by the Alpha Beta division of American Stores. The Arizona regional management secured private financing to purchase the Ar ...
, 22
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
grocery stores and support facilities in
northern California
Northern California (colloquially known as NorCal) is a geographic and cultural region that generally comprises the northern portion of the U.S. state of California. Spanning the state's northernmost 48 counties, its main population centers incl ...
were also sold.
The acquisition of the Jewel Companies, Inc. consisted of the Illinois-based
Jewel Food Stores
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwes ...
supermarket chain, Illinois-based
Osco Drug, Inc.
Osco Drug and Sav-on Drugs were the names of a pair of chain store, chain pharmacy, pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. S ...
, Massachusetts-based
Star Market
Star Market is a New England chain of supermarkets based in Greater Boston. It was owned by the Mugar family and started in 1915. The company was sold to The Jewel Companies, Inc. in 1964 and later to Investcorp, which in turn sold the chain to ...
, California-based Sav-on Drugs, Montana-based
Buttrey Food Stores, and
White Hen. This acquisition also returned
L. L. Skaggs's
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
chain to the
Skaggs family
The Skaggs Family, starting from a small frontier town in southern Idaho, came to have an important impact on merchandising across much of the United States. During most of the 20th century, the Skaggs name was prominent on hundreds of stores th ...
ownership. And Sav-on Drugs, another Jewel Companies subsidiary, had been founded by C.J. Call, who had once been a business partner of another of
Sam Skaggs's uncles,
O.P. Skaggs.
This merger added 193 supermarkets, 358 drugstores, 140 combination food and drug stores, 301 convenience stores, and 132 discount stores to American Stores' holdings. But in 1985, the company found itself in legal trouble through its new subsidiary. A
salmonella
''Salmonella'' is a genus of rod-shaped (bacillus) Gram-negative bacteria of the family Enterobacteriaceae. The two species of ''Salmonella'' are ''Salmonella enterica'' and ''Salmonella bongori''. ''S. enterica'' is the type species and is fur ...
food-poisoning outbreak affecting some 20,000 people in the midwest was traced to Jewel's ''Hillfarm Dairy'' that had supplied tainted milk to
Jewel stores in March and April 1985. In 1987, Jewel was found not liable for
punitive damages
Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. ...
in ''Illinois Cook County Circuit Court'' but agreed to pay
compensatory damages
At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at ...
estimated at $35 to $40 million.
In 1985, American Stores sold the White Hen chain, since convenience stores did not fit into the company's plans.
Buttrey Food & Drug
Buttrey Food & Drug was a chain of grocery stores founded in Havre, Montana and formerly headquartered in Great Falls, Montana. The company was founded in 1896 as a chain of department stores branded Buttrey Department Store. The company opened ...
and
Star Market
Star Market is a New England chain of supermarkets based in Greater Boston. It was owned by the Mugar family and started in 1915. The company was sold to The Jewel Companies, Inc. in 1964 and later to Investcorp, which in turn sold the chain to ...
were put up for sale in order to raise capital and pay down debt. Although the company continued to operate these subsidiaries, investment in remodeling and new construction for these stores and for
Acme Markets
Acme Markets Inc. is a supermarket chain operating 161 stores throughout Connecticut, Delaware, Maryland, New Jersey, the Hudson Valley of New York, and Pennsylvania and, as of 1999, is a subsidiary of Albertsons, and part of its presence in t ...
was minimal throughout the 1980s.
By 1987, American Stores Company was the largest drug retailer in the United States, but only the third-largest grocery retailer and underperforming its peers. In October 1987, the company exited the Idaho and Washington drugstore markets with the sale of 25
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
units to
Pay Less Drug Stores.
Acquisition of Lucky Stores
In March 1988, American Stores made an unsolicited tender offer for
Lucky Stores
Lucky Stores is an American supermarket chain founded in San Leandro, California, in 1935. Lucky is currently operated by Albertsons in Utah and Save Mart Supermarkets in Northern California.
In 1998, Lucky's parent company, American Stores, ...
, an
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
competitor noted for high efficiency and low prices. American Stores’
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
chain in California was struggling, plagued by high prices and a reputation for poor service. At the time, Lucky was California's leading grocery retailer, due in part that it was the only chain with a significant presence in both
northern California
Northern California (colloquially known as NorCal) is a geographic and cultural region that generally comprises the northern portion of the U.S. state of California. Spanning the state's northernmost 48 counties, its main population centers incl ...
and
southern California
Southern California (commonly shortened to SoCal) is a geographic and Cultural area, cultural region that generally comprises the southern portion of the U.S. state of California. It includes the Los Angeles metropolitan area, the second most po ...
. Lucky refused American Stores' first offer. Within a month, American Stores proposed to up its bid if Lucky would agree to a friendly takeover. Again Lucky management rejected the offer as inadequate and was said to be contemplating defensive strategies. Later, American Stores upped its bid to $2.5 billion, or $65 per share. Lucky accepted and American Stores was on track to become the largest supermarket chain in the United States, over the
Kroger
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cincin ...
and
Safeway
Safeway is an American supermarket chain founded by Marion Barton Skaggs in April 1915 in American Falls, Idaho. The chain provides grocery items, food and general merchandise and features a variety of specialty departments, such as bakery, d ...
chains.
The acquisition included then
Dublin, California-based Lucky Stores, with stores in California, Nevada, and Arizona; Tampa-based
Kash n' Karry
Sweetbay Supermarket was a chain of American supermarkets located in Florida. The first Sweetbay Supermarket to open was in Seminole, Florida, in November 2004. The company's headquarters was located near Tampa, in Hillsborough County, Florida. ...
, with stores in Florida; and a minority interest in
Milan, Illinois
Milan ( ) is a village in Rock Island County, Illinois, United States. The population was 5,099 at the 2010 census.
The village is located near the Quad Cities of Illinois and Iowa.
History
The village is on the Rock River in northwest Illinois ...
-based
Eagle Food Centers
Eagle Food Centers was a chain of supermarkets that operated in Iowa, Wisconsin, Indiana, and Illinois for several years. The company was based in Milan, Illinois. The company operated stores under many names, including BOGO'S, Eagle Country M ...
.
In August 1988, California Attorney General
John Van de Kamp
John Kalar Van de Kamp (February 7, 1936 – March 14, 2017) was an American politician and lawyer who served as Los Angeles County District Attorney from 1975 until 1981, and then as the 28th Attorney General of California from 1983 until 1991.
...
asked the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
to void the sale, claiming that a Lucky-Alpha Beta juggernaut would cost California consumers $400 million by reducing competition. The
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
refused but did force the divestiture of 37 Alpha Beta stores, which were sold in December 1988, the same month 38 Lucky stores in Arizona were also sold. Van de Kamp then initiated a lawsuit against American Stores under the
Clayton Antitrust Act
The Clayton Antitrust Act of 1914 (, codified at , ), is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anticompetitive practices in their incipie ...
, and on September 1988, a federal judge in
Los Angeles
Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world' ...
issued a
preliminary injunction
An injunction is a legal and equitable remedy in the form of a special court order that compels a party to do or refrain from specific acts. ("The court of appeals ... has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in par ...
against the merger. American Stores appealed, and in April 1989, a
Ninth Circuit
The United States Court of Appeals for the Ninth Circuit (in case citations, 9th Cir.) is the U.S. federal court of appeals that has appellate jurisdiction over the U.S. district courts in the following federal judicial districts:
* District o ...
panel in San Francisco overturned the injunction. Van de Kamp appealed this reversal to the
U.S. Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
. Meanwhile, American Stores continued to plan its integration of
Lucky while it waited for the district court to lift the injunction as ordered by the Ninth Circuit.
However, on August 22, 1989, Associate Justice
Sandra Day O'Connor
Sandra Day O'Connor (born March 26, 1930) is an American retired attorney and politician who served as the first female associate justice of the Supreme Court of the United States from 1981 to 2006. She was both the first woman nominated and th ...
, in her capacity as Circuit Justice for the Ninth Circuit, issued an interlocutory order staying the Ninth Circuit's issuance of its mandate back to the district court, which kept the preliminary injunction in place while the parties briefed the issues before the high court. After oral argument on January 19, the U.S. Supreme Court issued a unanimous decision on April 30, 1990 (although Justice
Anthony Kennedy
Anthony McLeod Kennedy (born July 23, 1936) is an American lawyer and jurist who served as an associate justice of the Supreme Court of the United States from 1988 until his retirement in 2018. He was nominated to the court in 1987 by Presid ...
filed a concurring opinion separately from Justice John Paul Stevens' opinion for the Court) in favor of the state of California.
[.] The Court ruled that the words "injunctive relief" in Section 16 of the Clayton Act impliedly included the power to force divestiture of assets in order to ameliorate harm to the market from an anticompetitive merger.
Wishing to avoid additional lengthy litigation, the following month American Stores reached an agreement with
Van de Kamp
A van is a type of road vehicle used for transporting goods or people. Depending on the type of van, it can be bigger or smaller than a pickup truck and SUV, and bigger than a common car. There is some varying in the scope of the word across th ...
whereby the company was allowed to convert 14
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
stores to the Lucky name but also had to sell 161 southern California stores (152 Alpha Beta stores and 9 Lucky stores) within 5 years. The deal put no restrictions on American Stores' future growth in California and did not require state approval of the buyer or terms of the sale.
In 1989, Kash n' Karry was acquired by its management from American Stores for $305 million.
American Stores also sold the minority interest in Eagle Food Centers that it had acquired from Lucky and sold it to New York-based ''Odyssey Partners''.
Headquarters move to Southern California
Based on a recommendation by
Booz-Allen, American Stores relocated its corporate headquarters from
Salt Lake City
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
to
Irvine, California
Irvine () is a Planned community, master-planned city in South Orange County, California, United States, in the Los Angeles metropolitan area. The Irvine Company started developing the area in the 1960s and the city was formally incorporated on ...
, in July 1988. At the time, the company indicated the reason for the move was to place the headquarters in one of the company's major operating market areas and therefore closer to its business interests. However, the corporate headquarters was moved back to Salt Lake City in 1989 with little explanation.
Sav-on Name Change
American Stores plans to build a coast-to-coast drugstore chain in the United States were underway. The strategy was to build a nationwide network of pharmacies, streamline operations and advertising in order to gain national recognition for the brand, especially for the high-margin private label products. The name
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
was chosen as the national chain banner because of the large number of stores which already had that name and existed in various parts of the United States. The name change was completed for the ''Skaggs'' drugstores in 1985 and then for the ''Sav-on'' stores in 1986.
The name 'Osco' did not resonate well with ''Sav-on's'' southern California customer base. American Stores eventually made the decision to change the name of the former ''Sav-on'' stores back to
Sav-on Drugs
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers bou ...
. Rumors circulated at the time claiming that the reason for the name change back to 'Sav-on' was due to 'Osco' having the same pronunciation as the Spanish word 'asco' (oss-ko) which means disgust or loathing, a considerable factor within
southern California
Southern California (commonly shortened to SoCal) is a geographic and Cultural area, cultural region that generally comprises the southern portion of the U.S. state of California. It includes the Los Angeles metropolitan area, the second most po ...
’s heavily Hispanic market. This explanation for the name change wa
refuted by American Stores
The name change on all stores was completed in 1989 and the Sav-on Drugs brand was re-launched in southern California and Nevada.
American Drug Stores, Inc.
In 1989, a new subsidiary ''American Drug Stores, Inc.'' was formed and consisted of American Stores drugstore holdings of
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
, Sav-on Drugs, the ''Osco'' side of the
Jewel-Osco
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwest ...
food-drug combination stores and ''RxAmerica''. ''RxAmerica'' began earlier in 1989 as a mail service prescription fulfillment center with a facility in Salt Lake City.
Jewel-Osco Florida
On March 16, 1989, the company opened a 75,000-square-foot ''Jewel-Osco'' combination store in
Largo, Florida
Largo is the third largest city in Pinellas County, Florida, United States, as well as the fourth largest in the Tampa Bay area. As of the 2020 Census, the city had a population of 82,500, up from 69,371 in 2000.
Largo was first incorporated in 1 ...
. This marked American Stores’ re-entry into the Southeast after an absence of nearly two decades. Mark S. Skaggs, son of Sam Skaggs was president of the new ''Jewel-Osco of Florida'' division. This was a wholly separate division of the company and was not part of the
Jewel Food Stores
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwes ...
chain in the midwest or the
Osco/American Drug Stores subsidiary. Unlike the combination stores in the midwest, where Jewel ran the food side of the combination stores and Osco ran the drug side, the Florida stores were run by a one overall manager, similar to the way a ''Skaggs Alpha Beta'' store was managed. Only six ''Jewel-Osco'' stores were opened in Florida and all were sold to
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
in 1992.
1990s
In the early 1990s, reducing the $3.4 billion in debt load became the prime challenge for the company; doing so was mainly accomplished through asset sales. By the end of fiscal 1992, long term debt was down from $3.4 billion to $2.1 billion.
Divestitures
In the early 1990s, American Stores divestitures included:
* October 1990: 44
Buttrey Food & Drug
Buttrey Food & Drug was a chain of grocery stores founded in Havre, Montana and formerly headquartered in Great Falls, Montana. The company was founded in 1896 as a chain of department stores branded Buttrey Department Store. The company opened ...
stores located in Montana, Wyoming, Washington, Idaho, and North Dakota by a management-led $184 million
leveraged buyout
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loan ...
.
* June 1991: 51
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
stores in Colorado, Utah, and Wyoming sold to
Pay Less Drug Stores, at that time a division of
Kmart Corp., for $60 million.
* June 1991: 152 unit
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
chain sold to the
Yucaipa Companies
The Yucaipa Companies, LLC is an American private equity firm founded in 1986 by Ronald Burkle. It specializes in private equity and venture capital, with a focus on middle-market companies, growth capital, industry consolidation, leveraged buy ...
for $251 million.
* October 1991: 74 newly re-branded and remodeled Texas, Oklahoma, Florida, and Arkansas ''Jewel-Osco'' combination stores for $454 million to
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
. Earlier in 1991 and prior to the announcement of the sale, American Stores had remodeled and renamed these stores from ''Skaggs Alpha Beta'' to ''Jewel-Osco''. The 11 ''Jewel-Osco'' New Mexico stores were retained by American Stores and operated as ''Jewel-Osco Southwest, Inc''., a subsidiary separate from the
Jewel Food Stores
Jewel-Osco is a regional supermarket chain in the Chicago metropolitan area, headquartered in Itasca, a western suburb. In 2007, the company had 188 stores across northern, central, and western Illinois; eastern Iowa; and portions of northwes ...
chain in the midwest.
* The company also put its 275 unit
ACME Markets
Acme Markets Inc. is a supermarket chain operating 161 stores throughout Connecticut, Delaware, Maryland, New Jersey, the Hudson Valley of New York, and Pennsylvania and, as of 1999, is a subsidiary of Albertsons, and part of its presence in t ...
chain on the block in early 1991, but shortly thereafter decided not to sell
Acme Markets
Acme Markets Inc. is a supermarket chain operating 161 stores throughout Connecticut, Delaware, Maryland, New Jersey, the Hudson Valley of New York, and Pennsylvania and, as of 1999, is a subsidiary of Albertsons, and part of its presence in t ...
, apparently because the bids received were not deemed sufficient.
* November 1994, the
Star Market
Star Market is a New England chain of supermarkets based in Greater Boston. It was owned by the Mugar family and started in 1915. The company was sold to The Jewel Companies, Inc. in 1964 and later to Investcorp, which in turn sold the chain to ...
grocery division, fifth in market share in the
Greater Boston
Greater Boston is the metropolitan region of New England encompassing the municipality of Boston (the capital of the U.S. state of Massachusetts and the most populous city in New England) and its surrounding areas. The region forms the northern ar ...
area, consisting of 33 food stores in
and
Rhode Island
Rhode Island (, like ''road'') is a U.S. state, state in the New England region of the Northeastern United States. It is the List of U.S. states by area, smallest U.S. state by area and the List of states and territories of the United States ...
was sold to ''Investcorp Bank'', an international investment bank for $288 million in cash and the assumption of substantially all of its outstanding liabilities. American Stores deemed
Star Market
Star Market is a New England chain of supermarkets based in Greater Boston. It was owned by the Mugar family and started in 1915. The company was sold to The Jewel Companies, Inc. in 1964 and later to Investcorp, which in turn sold the chain to ...
expendable because the company wanted to focus on markets where it held first or second place in market share.
* January 1995, the company sold 45 Acme Markets located in New York and northern Pennsylvania to the
Penn Traffic Company for $94 million.
Acquisitions
At the same time that the company was making major divestments in the early 1990s, American Stores also looked for opportunities to make strategic minor acquisitions, ones that would enhance its position in the main markets where it needed to strengthen market share.
* The company's
California
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
drugstore operations were enhanced through the early 1992 $60 million purchase of 85
CVS Stores (63
CVS Pharmacy
CVS Pharmacy, Inc. is an American retail corporation. A subsidiary of CVS Health, it is headquartered in Woonsocket, Rhode Island. It was also known as, and originally named, the Consumer Value Store and was founded in Lowell, Massachusetts, in ...
drugstores and the rights to operate 22 CVS health and beauty aid stores) from the
Melville Corporation
Melville Corporation, formerly based in Rye, New York, was a large retail holding company incorporated by Ward Melville in 1922 from Melville Shoe Corporation, Melville Shoe Company. It became CVS Corporation in 1996 under a massive reorganization ...
. These stores converted to the
Sav-on Drugs
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers bou ...
and Sav-on Express banners. Later that year, 30
Thrifty and ''Rx Plus'' drugstores in
Arizona
Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Fou ...
and
Nevada
Nevada ( ; ) is a U.S. state, state in the Western United States, Western region of the United States. It is bordered by Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east. N ...
were acquired.
* The following year the
Midwest
The Midwestern United States, also referred to as the Midwest or the American Midwest, is one of four Census Bureau Region, census regions of the United States Census Bureau (also known as "Region 2"). It occupies the northern central part of ...
region received a boost when ''Reliable Drug'' (a 55 unit chain) in Indiana, Illinois, Iowa, Kansas, and Missouri was bought. These stores were soon re-bannered as
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
stores.
* February 1995, American Stores spent about $37 million for 17 ''Clark Drug'' stores in southern California, which were then converted to the
Sav-on Drugs
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers bou ...
name.
Transformation into an Operating Company
American Stores had long been run as a decentralized
holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
, but in order to compete in the fierce retail environment of the 1990s the company announced plans in 1992 to transform itself into an integrated operating company. As part of this transition, the company also began to centralize company-wide its procurement, warehousing, inventory control, distribution, marketing, payroll and human resources operations. Another aspect of the plan involved the consolidation of the central support organizations of the drugstore and grocery store operations. At the same time, American Stores sought to initiate faster growth, this time primarily through the opening of new stores and not through acquisitions. This ambitious plan to create better efficiencies won a lot of support from investors. The plan, called the ''Delta Project'', was expected to turn American Stores into a more profitable national supermarket company with greater shareholder value by centralizing its buying operations, as well as putting together more food and drugstore combination stores.
From 1992 up through 1998, American Stores consolidated operations and moved major responsibilities of their subsidiaries to their headquarters in
Salt Lake City, Utah
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
. The company's employees based in
Salt Lake City
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
increased from fewer than 100 in 1992 to over 1,200 by 1998. During this period, American Stores itself did not operate any food or drugstores in
Utah
Utah ( , ) is a state in the Mountain West subregion of the Western United States. Utah is a landlocked U.S. state bordered to its east by Colorado, to its northeast by Wyoming, to its north by Idaho, to its south by Arizona, and to it ...
having sold-off the
Osco Drug
Osco Drug and Sav-on Drugs were the names of a pair of chain pharmacies that operated in the United States. Osco Drug was founded by the Skaggs family. Alpha Beta grocery store was purchased by American Stores in 1961. Skaggs Drug Centers boug ...
and
Alpha Beta
Alpha Beta was a chain of supermarkets in the Southwestern United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
History
Before Alpha Beta ...
Utah stores in 1991.
Super Saver Food
In early 1994, American Stores launched a discount warehouse food store concept in California. New store formats were built in
Anaheim
Anaheim ( ) is a city in northern Orange County, California, part of the Los Angeles metropolitan area. As of the 2020 United States Census, the city had a population of 346,824, making it the most populous city in Orange County, the 10th-most p ...
,
Indio Indio may refer to:
Places
* Indio, Bovey Tracey, an historic estate in Devon, England
* Indio, California, a city in Riverside County, California, United States
People with the name
* Indio (musician), Canadian musician Gordon Peterson
* Índio ...
,
National City,
Oceanside and several existing Lucky stores were converted to this warehouse format in
Sacramento
)
, image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg
, mapsize = 250x200px
, map_caption = Location within Sacramento ...
,
Pittsburg,
Vacaville
Vacaville is a city located in Solano County in Northern California. Sitting approximately from Sacramento and from San Francisco, it is within the Sacramento Valley. As of the 2020 census, Vacaville had a population of 102,386, making it th ...
, and
Woodland
A woodland () is, in the broad sense, land covered with trees, or in a narrow sense, synonymous with wood (or in the U.S., the ''plurale tantum'' woods), a low-density forest forming open habitats with plenty of sunlight and limited shade (see ...
. Initially, these stores were named ''Price Advantage'', based on a ''Lucky Advantage'' prototype store in
Escondido, California
Escondido is a city in San Diego County, California, United States. Located in the North County region, it was incorporated in 1888, and is one of the oldest cities in San Diego County. It has a population of 151,038 as of the 2020 census.
Et ...
.
Price Club sued American Stores over
name infringement shortly before the grand opening of the stores. The stores were swiftly renamed ''Food Advantage'' the night before grand openings, with the word "Price" marked out with a thick ink marker on every label, tag and sign in the store. In the coming months these stores were branded as ''Food/Price Advantage'' and finally as
Super Saver Food.
Super Saver Food was a familiar brand which had been used in the 1970s and early 1980s by
Acme
Acme is Ancient Greek (ακμή; English transliteration: ''akmē'') for "the peak", "zenith" or "prime". It may refer to:
Arts and entertainment
* ''Acme'' (album), an album by the Jon Spencer Blues Explosion
* Acme and Septimius, a fictional ...
for their discount grocery store format in
Pennsylvania
Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
and was a trademark still owned by American Stores.
Kap's Kitchen and Pantry
In 1997, the company opened ''Kap's Kitchen and Pantry'' in
Salt Lake City, Utah
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
, a prototype for entry into the high end food retail market with selections of natural and organic products, produce, seafood, grocery, meat and poultry, bakery and prepared foods. The venture was quickly abandoned and the store was closed within a year.
Skaggs Family Exit
In 1994, at the company's annual shareholder meeting, the company board elected Sam Skaggs’ son Don L. Skaggs a director effective October 1, 1994, to fill the position rendered vacant by the resignation of Aline W. Skaggs, wife of
Sam Skaggs. Don L. Skaggs was also the Executive Vice President and General Manager o
Skaggs Telecommunications Service, Inc.a non-retail subsidiary of American Stores consisting of an audio media production company, a satellite telepor
U.S. Satellite Corporationand an operation that sold equipment to law enforcement agencies. Seventy-two-year-old
Sam Skaggs relinquished the chairmanship of American Stores to Victor L. Lund in 1995.
Skaggs Skaggs may refer to:
*Skaggs Companies, predecessors to many famous United States retailing chains, including Safeway, Albertsons, Osco, and Longs Drug Stores
*Skaggs family, a family prominent in merchandising
*Skaggs School of Pharmacy, the pharm ...
still held an 18.3 percent stake in the company and a seat on the company board, and when he announced in July 1996 that he was exploring options for his stake, speculation about a possible takeover ran wild. The company was not certain if Skaggs’ intention was to launch a proxy fight for control of American Stores or to alter its current management or direction. By February 1997, an agreement was reached between American Stores and Skaggs whereby the company would repurchase about 12.2 million of Skaggs's shares for $550 million, with the remaining shares subsequently to be sold to the public through a secondary offering. This purchase reduced
Skaggs Skaggs may refer to:
*Skaggs Companies, predecessors to many famous United States retailing chains, including Safeway, Albertsons, Osco, and Longs Drug Stores
*Skaggs family, a family prominent in merchandising
*Skaggs School of Pharmacy, the pharm ...
’ stake in the company to five percent, insufficient ownership for him and his family members to retain seats on the company's board.
Acquisition by Albertsons
At the company's June 17, 1998, annual meeting of shareholders in Salt Lake City, American Stores highlighted its accomplishments over the past year and its plans for the sustained long-term growth. In his keynote address, chairman and chief executive officer Victor L. Lund said, ''"During the past year, we have transformed many of our key plans for the future to reality. We are confident that our plan for growth is working and is squarely on track. We've set our sights very high because we know our visions of tomorrow will be achieved". '' A day earlier, American Stores had held a ceremony marking the opening of the ''American Stores Center'', its 24 story corporate office building in downtown
Salt Lake City, Utah
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
. The building had a company-owned Italian restaurant, ''Il Sansovino'', and a convenience store, ''The American Store'', on the ground level floor.
Six weeks later, on August 3, 1998 it was announced that
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
would acquire American Stores for $11.7 billion. Soon after the announcement, the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
charged that Albertsons' proposed acquisition of American Stores would substantially lessen supermarket competition in California, Nevada, and New Mexico. The proposed acquisition, the FTC charged, could result in higher prices or reduced quality and selection for consumers. As a condition of the sale, Albertsons' and American Stores agreed to sell 144 supermarkets (104 Albertson's supermarkets, 40 American Stores' Lucky supermarkets) in 57 markets in order to resolve. The divestiture agreement, was the largest retail divestiture ever required by the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
. Due to the mandated sale of stores, the acquisition took nearly a year to complete. In June 1999, the acquisition was complete, ASC was de-listed on the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
and American Stores ceased to exist.
During 1999, the drugstore operations division and general merchandise procurement functions were moved from Salt Lake City to
Scottsdale, Arizona
, settlement_type = City
, named_for = Winfield Scott
, image_skyline =
, image_seal = Seal of Scottsdale (Arizona).svg
, image_blank_emblem = City of Scottsdale Script Logo.svg
, nick ...
, operating as ''Albertsons Drug Region''. The functions which supported the food divisions were consolidated and moved from Salt Lake City to
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
' headquarters in
Boise
Boise (, , ) is the capital and most populous city of the U.S. state of Idaho and is the county seat of Ada County. On the Boise River in southwestern Idaho, it is east of the Oregon border and north of the Nevada border. The downtown area's ...
. For a short time after the acquisition of American Stores,
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
leased several floors of the ''American Stores Center'' building to the
International Olympic Committee
The International Olympic Committee (IOC; french: link=no, Comité international olympique, ''CIO'') is a non-governmental sports organisation based in Lausanne, Switzerland. It is constituted in the form of an association under the Swiss ...
- Utah had been awarded the
2002 Winter Olympics
The 2002 Winter Olympics, officially the XIX Olympic Winter Games and commonly known as Salt Lake 2002 ( arp, Niico'ooowu' 2002; Gosiute Shoshoni: ''Tit'-so-pi 2002''; nv, Sooléí 2002; Shoshoni: ''Soónkahni 2002''), was an internation ...
. The building is now owned by
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
.
For a very short time after the American Stores acquisition was completed, Albertsons was the largest food/drug chain in the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
operating nearly 2,500 stores in 40 states, until
Kroger's acquisition of
Fred Meyer
Fred Meyer is an American chain of hypermarket superstores founded in 1922 in Portland, Oregon, USA, by Fred G. Meyer. The stores are found in the northwest U.S., within the states of Oregon, Washington, Idaho, and Alaska. The company merged w ...
completed the following month. Albertsons preserved the Acme Markets, Jewel-Osco, Osco Drug and Sav-on Drugs namesakes. Shortly after the sale,
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
rebranded the Lucky stores under the Albertsons name because both chains had stores and overlap in northern and southern California. (The
Lucky brand would be revived in 2006 by
SuperValu).
References
External links
*
U.S. Chain Store Timeline*
Business Network published: April 3, 1989 Jewel Osco dazzles Tampa with sparkling new format*
*
Edgar Online published: April 26, 1995: SEC Filing, filed by AMERICAN STORES CO Edgar Online published: June 21, 1995 American Stores Notice of Annual Meeting of ShareholdersBusiness Network published: July 8, 1996 American Stores awaits founder Skaggs' next move*
Chain Drug Review published March 17, 1997 Skaggs family to sell its stake in American StoresPress Release Newswire: June 17, 1998 American Stores Company Highlights Accomplishments During the Past Year and Vision for the Future*
FTC Release: June 22, 1999 Agreement with Albertson's and American Stores Requires Selling of 144 Stores in Order to Preserve Supermarket Competition in California, Nevada and New Mexico
{{Supermarkets of the United States
Holding companies established in 1917
Defunct supermarkets of the United States
Skaggs family
Retail companies disestablished in 1999
Retail companies established in 1917
1917 establishments in Pennsylvania
1999 disestablishments in Utah
Holding companies disestablished in 1999