Price Investments Hinder Supervalu Profits

October 16, 2014

Supervalu president and CEO Sam Duncan is encouraged with the progress the retailer is making and why not.  Identical store sales in the company's Save-A-Lot units were up 6.5% in the second quarter.

The company's total sales for the period ended September 6, increased 1.8% to $4.02 billion while profits declined to $31 million, or 11 cents a share, from $40 million, or 15 cents a share.  When adjusted for some non-recurring items, second quarter earnings were $34 million, or 13 cents a share.

"Midway through fiscal 2015, I am encouraged with the progress we have made across the business," said president and CEO Sam Duncan.  "The investments we have made at Save-A-Lot continue to drive sales and our retail food stores recorded their third consecutive quarter of positive identical store sales.  The addition of the Rainbow stores this past quarter is a positive for our independent business and we are encouraged by the early results."

Identical store sales in the Save-A-Lot Network increased 6.5% while identical store sales in the company's retail food segment increased 0.4%.

In Supervalu's largest segment, the independent business unit, sales were down slightly to $1.82 billion from $1.84 billion primarily due to lost accounts.  The company said it lost one new Albertson's banner that completed the transition to self-distribution, a larger lost customer and lower military sales, partially offset by new business including increased sales to existing customers.

Second quarter Save-A-Lot net sales increased 8% to $1.05 billion, but operating profits fell to $26 million from $32 million the prior year due to investments in price.

Source: Retailing Today

'Solid' Start In Fiscal 2015 For Supervalu

July 24, 2014

Supervalu posted $5.23 billion in net sales for the first quarter, a decrease of 0.1% from $5.24 billion last year; but president and CEO Sam Duncan expressed confidence in the company's performance, saying it is off to a solid start across business segments.

"Our first quarter results reflect the investments we are making this year to position the company for future success and I am pleased with our operating performance," said Duncan.

Save-A-Lot's net sales for the quarter were $1.35 billion, a 6.5% increase frm $1.27 billion last year, driven by a network identical store sales increase of 5.6%.  Identical store sales for corporate stores within the Save-A-Lot network were up 7.2%.

The company's Independent Business net sales for the quarter were $2.4 billion, a decrease of 2.6% from $2.46 billion last year, primarily due to lost accounts including lower sales to one New Albertson's banner that completed the transition to self-distribution and lower military sales, partially offset by net new business.

Retail Food net sales for the quarter remained flat compared to last year's $1.43 billion.  Identical store sales were up 0.6%.

On March 21, 2013, the company completed the sale of five retail grocery banners - Albertson's Acme, Jewel-Osco, Shaw's and Star Market.

Supervalu operates 3,320 stores, which include 1,805 independent stores serviced primarily by the company's food distribution business, 1,325 Save-A-Lot stores, of which 931 are operated by licensee owners; and 190 traditional retail grocery stores.

Source: Retailing Today

Supervalu To Acquire Rainbow Stores In The Twin Cities

May 7, 2014

Supervalu, the owner of Cub Foods, along with four Twin Cities-based independent grocery retailers, have each entered into definitive agreements to acquire select Rainbow Foods grocery stores.  In total, they agreed to acquire 18 Rainbow grocery stores, including 13 Rainbow pharmacies and three Rainbow liquor stores in Minnesota.

Jerry's Enterprises, Haug Enterprises, Lund Food Holdings and Rademacher Enterprises have joined Supervalu in executing these agreements.  Once completed, the acquired stores are intended to be operated by Supervalu, a Cub franchisee or an independent retailer as 10 new Cub Foods locations, two new Byerly's locations and six locations are expected to be operated under the Rainbow banner.

Of the 18 stores, Supervalu will have 100% ownership in three Cub stores, majority ownership in two Cub stores, minority ownership in three Cub stores and 100% ownership in two Rainbow stores as well as 100% ownership interest in eleven pharmacies.  Roundy's will be selling these 18 stores for approximately $65 million plus inventory.  Supervalu's aggregate purchase price across its multiple purchase agreements is approximately $35 million in cash plus the cost of inventory that will be purchased at the closing of the Rainbow store sale.  In addition, as part of the transactions, Supervalue will assume certain lease obligations and certain multi-employer pension liabilities related to the stores being acquired by Supervalu.

"Supervalu is thrilled to participate in this consortium of retailers that is acquiring Rainbow stores," said Sam Duncan, Supervalu's president and CEO.  "We're especially pleased that highly respected independent retailers here in the Twin Cities are also acquiring Rainbow stores.  These independent retailers are great customers to Supervalu who understand the importance of being a strong community grocer."

Cub Foods consists of a combination of corporate-ownded and franchised locations.  Following the close of the transactions, Cub Foods will total 66 stores in the Twin Cities and 77 stores banner-wide (including 76 stores in Minnesota and one in Illinois).  As part of acquiring these stores and with seasonal employment needs, Cub Foods expects to make more than 1,000 job offers in the coming months.

"For nearly five decades, Cub Foods has been a trusted grocer and innovator in the Twin Cities," said Mike Stigers, Cub Foods president.  "This community has always been important to us and it is our continued desire to deliver great products, excellent service and an incredible overall value in the grocery store.  With more stores under the Cub Foods brand and being serviced out of our distribution center in Hopkins, we will be better positioned to improve our efficiencies and explore ways to bring even stronger value and price competitiveness to our shoppers going forward."

The transactions are subject to customary closing conditions and are expected to be completed by the end of the summer.

Supervalu serves customers across the United States through a newtork of 3,339 stores made up of 1,819 independent stores serviced primarily by the company's food distribution business, 1,330 Save-A-Lot stores, of which 948 are operated by licensee owners, and 190 traditional retail grocery stores.

Source: Retailing Today