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SuperValu returns to profit in second quarter

Supervalu Inc. returned to a profit in its fiscal second quarter, absent hefty goodwill and impairment charges incurred a year earlier.

The supermarket operator’s results beat Wall Street estimates, but it cut the high end of its fiscal 2012 earnings outlook on Oct. 19.

Supervalu acquired most of Boise-based Albertsons in 2006, including all of that chain’s Idaho stores. An office in Boise houses Albertsons Intermountain West division headquarters and employees who work on Supervalu corporate tasks. Supervalu recently announced plans to outsource some information-technology jobs in Boise but did not provide a job total or timetable.

Supervalu launched a turnaround plan well over a year ago that has started to pay off. The company brought in new management, cut costs, lowered debt, closed stores and shifted to a heavier emphasis on tailoring its stores to local needs. It also has been expanding its low-price Save-A-Lot chain to meet the demands of cost-conscious shoppers. The company also announced in September that it would sell most of its gas stations as a way to free up cash.

Supervalu, which runs Supervalu, Jewel-Osco, Albertsons and other supermarket chains, reported net income of $60 million, or 28 cents per share, for the period ended Sept. 10. That compares with a loss of $1.47 billion, or $6.94 per share, a year ago.

The prior-year period included goodwill and impairment charges of $7.16 per share as well as certain other costs totaling 6 cents per share. Removing those items, earnings were 28 cents per share.

The latest results beat the 20 cents per share that analysts surveyed by FactSet expected.

Revenue dropped 3 percent to $8.43 billion from $8.66 billion, but still beat Wall Street’s estimate of $8.36 billion.

Retail food sales slipped to $6.6 billion from $6.7 billion mostly because SuperValu exited certain markets and its revenue at stores open at least a year fell 1.8 percent. This metric is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.

Independent business sales declined to $1.8 billion rom $2 billion primarily due to Target Corp.’s shift to self-distribution and the sale of Total Logistic Control.

For fiscal 2012, Supervalu now expects earnings between $1.20 and $1.30 per share. Its prior guidance called for earnings in a range of $1.20 to $1.40 per share. The company’s outlook assumes revenue of about $36.5 billion, down from a prior forecast of $37 billion.

Analysts expect earnings of $1.21 per share on revenue of $36.51 billion.

Supervalu expects full-year revenue at stores open at least a year to be down 2 percent to 2.5 percent, excluding fuel.

Supervalu has a network of about 4,300 stores and approximately 135,000 employees.

Its stock fell 27 cents, or 3.3 percent, to $7.90 in late morning trading Oct. 19.

About The Associated Press