Missouri Minute: Save A Lot lands new financing; state revenue collections increase

Good morning, MBA readers,

With ever-fierce competition and disruption from the likes of Amazon, it’s hardly an exaggeration that traditional retailers are in an uphill fight to stay relevant. That is certainly the case for Save A Lot, the St. Ann-based discount grocer that claims to up to 40% cheaper goods than mainstream supermarkets. It’s turned out that the company’s steep discounts aren’t enough to save it from financial woes.

Save A Lot has struggled in recent years. Its sales dropped 9.2% to $3.95 billion for its latest fiscal year, and the company shed nearly 100 stores in that same period. Last year, its debt ballooned to more than 20 times its adjusted pre-tax earnings. Facing dire financial straits, Save A Lot fell behind rivals such as Germany’s Lidl and Aldi, which have invested in new U.S. stores and remodeled others while keeping prices low. Over the past few months, speculation of a sale has swirled around the supermarket.

But all is not lost for Save A Lot — at least, not in the eyes of its lenders. A newly announced agreement with a majority of its lenders may give the discount grocer a fighting chance, with $138 million in new capital for flexibility and efforts to modernize stores. Some of those efforts are already underway, including a partnership with Amazon to allow consumers to retrieve their online orders from Save A Lot stores.

Scroll down to read more about that story and other top business news from around the state.


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Missouri revenue collections increase
Missouri’s budget director announced that revenue collections have increased significantly, with net year-to-date general revenue collections up 5.2% in December compared to the same time last year. (Associated Press)

Save A Lot gets $138 million shot in the arm
The St. Ann-based discount grocer struck a deal with lenders to recapitalize the business with a $138 million injection. The company said the money will help reduce its debt by $400 million. (Supermarket News)

Cleveland tire company to buy St. Louis’ Dent Wizard
Dealer Tire, a Cleveland-based tire distribution business, plans to buy St. Louis-based Dent Wizard, which specializes in automotive reconditioning and dent repair. Dent Wizard has nearly 2,800 employees, including more than 200 in St. Louis, and brought in revenue of $478 million in 2018. (St. Louis Business Journal)

KC venture firm raises millions for third fund
Royal Street Ventures has raised nearly $16.4 million for its third seed fund. The venture capital firm, which has offices in Kansas City and Park City, Utah, started raising investment for the fund in late December. Royal Street has backed Kansas City-area startups such as BacklotCars and PayIt. (Kansas City Business Journal)

Kansas City Barbeque Society faces turmoil, will sell headquarters
The world’s largest organization dedicated to barbecue is looking to sell its $3 million headquarters in Kansas City just a few years after buying and renovating the facility. The nonprofit is in debt and has faced a wave of a recent departures by high-ranking officials. (KCUR)

Missouri Farm Bureau opposes Rock Island trail
Missouri Farm Bureau President Blake Hurst said his organization will continue to fight the use of state money to develop the former railroad corridor into a bike trail, and that the farm bureau and is proposing a legislative fix. Ameren has agreed to transfer ownership of the corridor, and the Missouri Department of Natural Resources must raise $9.8 million for development and security of the 144-mile path. (Missourinet)

Fed: Tariffs cause harm to US manufacturing
A new Federal Reserve study says that tariffs imposed by President Donald Trump’s administration are doing more harm than good to the manufacturing sector, and that the “Phase One” trade deal with China won’t reverse the damage. The study says U.S. manufacturing has been hurt by higher costs for imported parts and raw materials, and counter-tariffs from trade partners. (St. Louis Post-Dispatch)

Missouri town sues DFA for river contamination
Cabool, a city in southern Missouri, is suing Dairy Farmers of America for allegedly releasing untreated wastewater into the Big Piney River. Cabool is seeking at least $1.2 million in reimbursements, arguing that the city has to spend more on water treatment. (Springfield News-Leader)

KC apartment property sells for $32 million
Infinity at Plaza West, a 224-apartment complex near the Country Club Plaza in Kansas City, has sold to to Omaha-based Burlington Capital Properties for $32 million. The apartments were owned by New York-based GFI Capital Group, which bought them in 2014 for more than $17 million. (Kansas City Business Journal)

After 91 years, a St. Louis market closing its doors
Local grocery shop Ladue Market made the announcement that it will close after struggling to compete with larger grocery stores. The grocer opened in 1928 and sells meat, produce and specialty items. (St. Louis Post-Dispatch)

Mercy names new Springfield president
Mercy Springfield Communities named Craig McCoy as its new CEO, replacing Jon Swope as leader of the health care system in Springfield. McCoy was previously the CEO of Bon Secours St. Francis Health Systems in Greenville, South Carolina. (Springfield Business Journal)

Health Forward Foundation names KC native as new leader
The Health Forward Foundation has named Kansas City native Qiana Thomason as its new president and CEO. The nonprofit distributes nearly $20 million in grants every year. (KCUR)


Go figure

400

That’s how many jobs Hallmark Cards plans to cut as part of a wider “transformation” across the company, The Kansas City Star reports. Hallmark will eliminate 325 positions in Kansas City and offer buyouts and lay off workers to bring the total reduction to 400. In all, the greeting card company employs about 30,000 people around the world, including 3,400 at its Kansas City headquarters. A statement from the company signals that the cuts are meant to reposition the company as it loses ground to online retail. “These changes, while not easy, will enable us to invest in new growth strategies that will ultimately help us realize our future vision,” Hallmark CEO Mike Perry said in the news release.


Say that again

“St. Louis’ seemingly provincial lending struggles not only with entrepreneurs that don’t historically ‘look like them,’ but (also) the types of businesses that are unique to these populations.”

That’s Galen Gondolfi, a senior loan counselor and spokesperson for St. Louis-based nonprofit microlender Justine Petersen, on the racial disparity in small business loans, St. Louis Public Radio reports. According to the Federal Reserve, banks turned down 53% of loan applications by black-owned businesses in 2014, while only 25% of loan applications by white business owners were denied that same year. It’s a familiar story for Freddie Lee James Jr., a St. Louis entrepreneur who founded Freddie Lee’s Gourmet Sauces with his wife Deborah in 2010. Although the business has consistently made $200,000 in annual profits, the business still can’t secure a business loan from a bank, James said. This may in part be due to the risk-averse lending culture in St. Louis, which never fully bounced back after the 2008 financial crisis, Gondolfi said.


Send tweet

The Greater Kansas City Chamber of Commerce on Monday backed Gov. Mike Parson’s decision to continue accepting refugees into the state of Missouri. The decision announced last week was made after the Trump administration issued an executive order giving states the choice to opt out of accepting refugees. In a statement issued Monday, Chamber President Joe Reardon said the organization has urged Parson to take action on the issue since October. Reardon added that, in 2017, the immigrant population in Kansas City had spending power of $3.1 billion and paid more than $325 million in state and local taxes. “Over our history, immigrants have made a positive economic contribution to the Kansas City area,” Reardon said in the statement. “New immigrants have become valued residents of our community — working hard, filling jobs that previously were going unfilled, establishing businesses, and contributing to our civic life.”


Hello, my name is

Keith White

Prairie Village, Kansas-based WireCo WorldGroup has appointed this industry executive as its new CEO, capping a six-month executive search by the board of directors, the Kansas City Business Journal reports. White replaces Jay Townsend, who has served as interim CEO of the wire rope maker since Jim O’Leary retired from the top job in July. White previously served as senior vice president of industrial at Kiewit Corp., an Omaha-based construction and engineering firm. He was also president of industrial air platform for Parker Filtration Group in the Kansas City area.


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