American Stores

American Stores Company was an American public corporation and holding company that operated supermarket, drugstore, convenience-store, restaurant, and general-merchandise businesses in the United States from 1917 until its acquisition by Albertsons in 1998. The company originated in Philadelphia through the combination of The Acme Tea Company and four smaller grocery businesses: Childs, George Dunlap, Bell Company, and A House That Quality Built. The merger created a large grocery organization at a time when the American food-retailing industry was becoming increasingly consolidated. The company expanded through acquisitions and the development of regional store banners. Its early portfolio included Acme Markets and other grocery operations, while later transactions brought in California’s Alpha Beta supermarkets and a range of drugstore businesses. In 1979, American Stores was acquired by Skaggs Companies, Inc. Although the combined corporation retained the American Stores name, control shifted to Skaggs management under Leonard S. Skaggs Jr., commonly known as Sam Skaggs. The transaction created a larger food-and-drug retailer with operations in supermarkets, pharmacies, restaurants, and general merchandise. During the 1980s, American Stores pursued an aggressive acquisition strategy. Its 1984 purchase of Jewel Companies added Jewel Food Stores, Osco Drug, Star Market, Sav-on Drugs, Buttrey Food & Drug Stores, and White Hen to the corporate portfolio. In 1988, the company acquired Lucky Stores after a contested takeover process. The Lucky transaction expanded American Stores’ presence in California and added Kash n’ Karry in Florida and a minority interest in Eagle Food Centers. The acquisitions made American Stores one of the largest United States drug retailers and a major supermarket operator, but they also increased debt and created integration and antitrust challenges. The company subsequently emphasized asset sales, debt reduction, centralization, and concentration on markets where its banners held strong positions. It sold or divested businesses including White Hen, Buttrey, portions of Osco, Alpha Beta stores, Kash n’ Karry, Star Market, selected Acme stores, and Jewel-Osco operations in several southern and central states. It also created American Drug Stores, Inc. in 1989 to coordinate its Osco and Sav-on pharmacy operations. In 1997, American Drug Stores and Longs Drugs combined their pharmacy-benefit-manager operations into RxAmerica. By 1998, American Stores operated approximately 1,575 food and drugstores in 38 states and reported approximately $20 billion in annual sales. Albertsons acquired the company in 1998, ending American Stores’ independent corporate existence. Its store banners and assets were integrated, sold, or subsequently reorganized under other ownership. American Stores is therefore best understood as a historical retail holding company rather than a currently operating consumer brand.

American Stores was formed in 1917 when The Acme Tea Company combined with four Philadelphia-area grocery businesses. The constituent companies together operated 1,223 stores, giving the new corporation substantial scale at its creation. By 1925, the chain had grown to nearly 1,800 locations, and in 1928 it purchased 305 grocery and meat stores in northern New Jersey from United States Stores Corporation. A proposed acquisition of Grand Union supermarkets was rejected by Grand Union shareholders in 1946. The company broadened its geographic footprint in the 1960s by acquiring California’s Alpha Beta supermarket chain in 1961. During the 1970s, Acme introduced the Super Saver discount format in Pennsylvania in response to lower-priced competitors such as ShopRite and Pathmark. In 1979, Skaggs Companies acquired American Stores. The resulting corporation used the American Stores name but was controlled by Skaggs management. At the time of the combination, American Stores was considerably larger than Skaggs, with 758 supermarkets, 139 drugstores, 53 restaurants, and nine general-merchandise stores, compared with 241 Skaggs locations. The 1980s were defined by expansion and restructuring. American Stores acquired Jewel Companies in 1984 for approximately $1.1 billion. The purchase brought together supermarket, pharmacy, convenience, and combination food-and-drug businesses. To raise cash, the company sold Rea and Derick drugstores and selected Alpha Beta locations. It also attempted to standardize its pharmacy presence: Skaggs Drug Center stores in the Northwest were converted to Osco, and Sav-on stores in California were temporarily rebranded as Osco. Customer response in southern California led the former Sav-on stores to recover their original name by 1989. In 1988, American Stores made an unsolicited offer for Lucky Stores. Lucky initially resisted, but accepted a revised offer valued at approximately $2.5 billion. The transaction prompted antitrust action by California Attorney General John Van de Kamp and proceedings involving the Federal Trade Commission. A federal injunction, an appellate reversal, and subsequent United States Supreme Court litigation delayed integration. The final 1990 settlement required the sale of 161 southern California stores while permitting limited banner conversions and continued expansion. The company also moved its headquarters from Salt Lake City to Irvine in 1988, then returned the headquarters to Salt Lake City in 1989. It entered Florida with Jewel-Osco combination stores in 1989, but the experiment remained small and the six stores were later sold to Albertsons. American Drug Stores was formed in 1989 to manage the company’s principal drugstore holdings. Debt reduction became a central priority in the early 1990s. American Stores sold or spun off numerous assets, including Buttrey, selected Osco locations, Alpha Beta stores, Kash n’ Karry, Star Market, and Acme stores in New York and northern Pennsylvania. It also made smaller pharmacy acquisitions, including former CVS stores in California, Reliable Drug stores, and Clark Drug stores. In 1992, the company announced the Delta Plan, intended to transform it from a decentralized holding company into a more integrated operating enterprise through centralized purchasing and stronger food-and-drug coordination. In 1997, American Drug Stores and Longs Drugs combined their pharmacy-benefit-manager operations to form RxAmerica, with each company initially holding half of the new business. Albertsons acquired American Stores in 1998. At the end of its independent period, the company had grown into a national network of roughly 1,575 food and drugstores in 38 states, with reported annual sales of approximately $20 billion. The corporate entity subsequently disappeared as an independent operator, although several of its retail banners continued under successor ownership.

1. 1998Albertsons acquisition

   Albertsons acquired American Stores, ending its independent corporate operations.

   Source
2. 1992Delta Plan announced

   American Stores announced a program to centralize purchasing and operate more as an integrated company.

   Source
3. 1990Lucky-Alpha Beta antitrust settlement

   The company agreed to divest 161 southern California stores while retaining a revised presence in the market.

   Source
4. 1988Lucky Stores acquisition

   American Stores agreed to acquire Lucky after a contested tender-offer process.

   Source
5. 1984Jewel Companies acquisition

   The purchase added major supermarket, drugstore, convenience, and combination-store operations.

   Source
6. 1979Skaggs acquisition

   Skaggs Companies acquired American Stores, while the combined company retained the American Stores name.

   Source
7. 1961Alpha Beta acquisition

   American Stores acquired California supermarket chain Alpha Beta.

   Source
8. 1925Chain approaches 1,800 stores

   American Stores had expanded to nearly 1,800 locations.

   Source
9. 1917American Stores is formed

   The Acme Tea Company merged with four Philadelphia-area grocery businesses to create American Stores.

   Source

Multi-banner American supermarket and drugstore operator focused on regional scale, food-and-drug combinations, pharmacy retailing, and consolidation of established local chains.

• Supermarket retailGrocery retail1917

  American Stores operated regional supermarket banners selling packaged groceries, fresh food, meat, beverages, and household products. The company’s supermarket business included Acme Markets, Alpha Beta, Jewel Food Stores, Star Market, Buttrey, and Lucky-related operations at different points in its history.

• Drugstore and pharmacy retailPharmacy retail

  The company operated drugstores and pharmacy departments through banners including Osco Drug and Sav-on Drugs. These businesses sold prescription medicines, over-the-counter products, personal-care goods, and general merchandise, and eventually formed the basis of American Drug Stores, Inc.

• Food-and-drug combination storesIntegrated grocery and pharmacy retail

  American Stores developed combination supermarkets and drugstores, including Skaggs Alpha Beta and Jewel-Osco formats. These stores were intended to provide grocery, pharmacy, and general merchandise shopping in one location and were used in several regional markets.

• RxAmericaPharmacy-benefit management1997

  In 1997, American Drug Stores and Longs Drugs combined their pharmacy-benefit-manager operations in a jointly owned venture called RxAmerica. It was a healthcare-services business rather than a consumer store banner.

• 1985Osco national pharmacy branding program

  United States

  American Stores promoted Osco Drug as a broader national pharmacy banner, converting Skaggs Drug Center stores and later temporarily changing Sav-on locations to Osco.

  Outcome. The Sav-on name was restored in southern California by 1989 after the Osco identity performed poorly with local customers.

  Source
• 1970Super Saver discount format

  Pennsylvania

  Acme Markets introduced the Super Saver discount grocery format to compete with lower-priced retailers that did not rely on trading stamps.

  Outcome. The format was part of Acme’s response to intensifying price competition in regional grocery retail.

  Source

• 1992Launch the Delta PlanStrategy

  American Stores faced intense competition and a large debt load after years of acquisitions.

  What changed. The company announced centralization of purchasing and a shift from a decentralized holding-company model toward an integrated operating company.

  Aftermath. The strategy accompanied asset sales and efforts to strengthen food-and-drug combination operations.

  Source
• 1988Acquire Lucky StoresM&A

  American Stores’ Alpha Beta business was struggling in California, while Lucky had a strong position and reputation for efficiency and low prices.

  What changed. After rejected offers, American Stores raised its bid to approximately $2.5 billion, or $65 per share, and acquired Lucky.

  Aftermath. The transaction triggered antitrust litigation and ultimately required the divestiture of 161 southern California stores.

  Acquisition offer. $2.5 billion, or $65 per share (1988)

  Source
• 1984Acquire Jewel CompaniesM&A

  American Stores sought greater scale across supermarkets, pharmacies, convenience stores, and food-and-drug combinations.

  What changed. It acquired Jewel Companies for approximately $1.1 billion and sold selected assets to help finance the transaction.

  Aftermath. The acquisition materially expanded the company but contributed to a complex portfolio and a substantial debt burden.

  Acquisition price. $1.1 billion (1984)

  Source

• 1985Jewel Hillfarm Dairy salmonella outbreakControversy

  A salmonella outbreak affecting approximately 20,000 people in the Midwest was traced to contaminated milk supplied by Jewel’s Hillfarm Dairy to Jewel stores. Jewel was found not liable for punitive damages in 1987 but agreed to pay compensatory damages estimated at $35 million to $40 million.

  Source

• 1998American Stores acquired by Albertsons

  Albertsons acquired American Stores, ending the latter’s existence as an independent company.

  M&A
  Source
• 1990American Stores reaches agreement concerning Lucky and Alpha Beta stores

  Following antitrust litigation, the company agreed to convert some stores to the Lucky banner and sell 161 southern California stores over five years.

  LawsuitRegulationM&A
  Source
• 1984American Stores acquires Jewel Companies

  The acquisition added Jewel Food Stores, Osco Drug, Star Market, Sav-on Drugs, Buttrey, and White Hen to American Stores.

  M&A
  Source

1. American Stores