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Supervalu Posts Higher Profit
January 9, 2007 · Reuters
Grocer Supervalu Inc. posted a higher quarterly net profit on Tuesday, boosted by its purchase of Albertsons Inc. stores.
Supervalu acquired most of Albertsons' grocery operations in early June, making it the second-largest traditional U.S. grocery chain, with stores such as Acme and Jewel-Osco.
The Minneapolis-based company recorded profit for the fiscal third quarter ended Dec. 2 of $113 million, or 54 cents per share, compared with $75 million, or 53 cents per share, a year earlier. Supervalu had forecast earnings of 52 cents to 56 cents per share.
Excluding the impact of certain securities, earnings were 56 cents a share, compared with the average analyst estimate of 57 cents, according to Reuters Estimates.
Net sales more than doubled to $10.7 billion from $4.7 billion a year ago.
Retail net sales soared to $8.4 billion, compared with $2.5 billion last year, reflecting the Albertsons acquisition.
Identical-store sales growth for Supervalu's existing stores dropped 1.3 percent. Including the acquired stores, identical-store sales growth rose 60 basis points on a combined basis.
Supervalu said it planned to spend about $1.2 billion on capital improvements such as remodeling in fiscal year 2008, up from an expected $950 million in 2007.
Mainstream grocers have had to grapple with consumers moving over to specialty chains such as Whole Foods Market Inc. for high-end fare, and discount stores such as Wal-Mart Stores Inc. for low prices for years.
Now, after rival Safeway Inc. tweaked its store design and product lineup to appeal to upscale shoppers, Supervalu is taking similar steps.
Supervalu's "Premium Fresh & Healthy" strategy, which it unveiled in November, will add more organic foods and specialty items to its stores, and expand produce, meat, seafood, bakery and deli departments.
Supervalu also forecast fiscal 2007 earnings in a range of $2.34 to $2.41 per share, including items including the impact of stock option expensing and the acquisition of Albertsons Inc. stores.
In December, Supervalu forecast $2.32 to $2.43 per share, including items.