Smart & Final Inc.

  • Overview

Smart & Final caters to caterers -- as well as small businesses, restaurants, and households in the western US. Its 235 non-membership warehouse stores stock groceries, party supplies, paper products, cleaning supplies, and more, in bulk sizes and quantities. The stores operate under the Smart & Final, Smart & Final Extra!, and Cash & Carry banners in urban and suburban areas in Arizona, California, Idaho, Nevada, Oregon, and Washington, as well as northern Mexico. Founded in 1871 in Los Angeles, it later took the names of owners J. S. Smart and H. D. Final. The chain was acquired by private equity firm Ares Management for about $975 million in late 2012.

Change in Company Type

Former owner Apollo Global Management sold a majority stake in Smart & Final to Ares Management in November 2012. (Smart & Final's senior management retained its minority stake in the business.) Apollo acquired the majority share in Smart & Final in 2007 for about $890 million from France's Groupe Casino, which owned the chain since 1984.

Geographic Reach

Smart & Final operates stores in Arizona, California, Idaho, Nevada, Oregon, and Washington. Outside the US, Smart & Final operates 13 stores in Mexico through a joint venture with Calimax, a major grocery store operator there.

Operations

In addition to 180-plus Smart & Final Warehouse stores, the retailer also operates about 50 stores under the Smart Foodservice Cash & Carry name. The stores carry a broad range (more than 13,000 products) of restaurant-quality food, food service supplies, and culinary equipment.

Financial Analysis

Smart & Final's stores rang up an estimated $2 billion in sales in 2012, a flat comparison versus 2011. That's down from $2.4 billion in 2010. The decrease in sales resulted from the sale of 34 Henry's Farmers Market and nine Sun Harvest stores in 2011.

Strategy

Few changes in the operation of Smart & Final are expected following the change in ownership in late 2012. Under Apollo, Smart & Final had been opening larger stores, including more than 30 under the Smart & Final Extra banner in California. Smart & Final Extra stores (10,000 to 15,000 square feet) are larger than traditional Smart & Final locations and house expanded selections of products for both business and household customers. The warehouse chain has also been exploring new markets, but is quick to pull the plug when they don't meet its expectations. The company closed five Denver-area SmartCo Foods stores that opened in summer 2010 in mid-December, citing disappointing sales at the new locations. The failed experiment cost an estimated $40 million to $70 million.

Divestments

On the strength of the recovering economy, Smart & Final cashed out of its investment in the 34 Henry's Farmers Market and nine Sun Harvest stores (acquired in 2007) by selling them to Sprouts in 2011. As part of the deal, which closed in April, owner Apollo Management became the majority owner of the combined Sprouts-Henry's company, while remaining the principal equity owner in Smart & Final.

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Smart & Final Inc.


600 Citadel Dr
Commerce, CA 90040-1562
Phone: 1 (323) 869-7500
Fax: 1 (323) 5646729
www.smartandfinal.com

STATS


  • Employer Type: Private
  • President and CEO: David Hirz
  • CFO: Richard Phegley
  • Senior Vice President, Supply Chain Di: Marie Robinson

Major Office Locations

  • Commerce, CA