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Supervalu sees 2Q loss, in active talks on options

Grocery store operator Supervalu, which operates Albertsons stores in Idaho, lost money in its latest quarter, but the struggling company said it is in active discussions with several parties over a possible deal.

Supervalu fired its CEO in July, replacing him with Chairman Wayne Sales to lead its turnaround effort. It has closed stores, suspended its dividend, and has been looking for other ways to cut costs. The company has been reviewing options with financial advisers, a process that typically includes the possibility of selling the company.

Supervalu said Oct. 18 that it is still reviewing its strategic options and that it has received a number of indications of interest and is talking with several parties.

Shares rose 10 cents, or 4.9 percent, to close at $2.14 Oct. 19. The stock has lost nearly three-quarters of its value this year.

Supervalu owns 33 Albertsons stores in Idaho and employs approximately 1,000 people at its offices in Boise. The company purchased Albertsons in 2006.

The Minneapolis company, whose chains also include Cub Foods, Jewel-Osco and Save-A-Lot, isn’t the only grocer to have struggled since the recession. Competition in the sector has intensified as consumers watch their spending and more companies seek a cut of their grocery budgets. Many supermarkets have cut their prices to woo shoppers, but this can erode profitability.

For example, Supervalu said Oct. 18 that it has cut prices at its Jewel-Osco stores as part of its plan to increase traffic.

In the three months ended Sept. 8, Supervalu lost $111 million, or 52 cents per share. That compares with a profit of $60 million, or 28 cents per share, a year earlier.

Earnings broke even when costs for closing stores; severance; the declining value of “intangible assets,” which can include a company’s brand; and other one-time items were excluded. Analysts expected profit of 12 cents per share, according to a FactSet poll.

Supervalu has posted an annual loss for three of its past four fiscal years.

In the most recent quarter, revenue also declined 5 percent to $8.04 billion from $8.43 billion, as the company sold most of its retail fuel centers and revenue from stores open at least a year dropped. Wall Street forecast revenue of $8 billion.

Save-A-Lot sales edged up slightly, as the company had 47 new stores at quarter’s end.

The company expects to lower its debt by $400 million to $450 million for the year. Supervalu has about $6.1 billion in long-term debt. It anticipates $900 million to $950 million in cash flow from operations for the year ending in February 2013, which will be used to reduce debt and freshen up its stores.

The company also announced Oct. 18 that Leon Bergmann left the following day, and will be succeeded as president of independent business by Janel Haugarth. She will continue to lead Supervalu’s business optimization efforts.

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Idaho Business Review staff writer Brad Iverson-Long contributed to this report.

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One comment

  1. Burkle will triage Idaho and the Southwest, and Albertsons will be a memory.

    What killed Albertsons as much as anything is the dramatic collapse in Idaho’s per capita income from 1980 (37th) to present day (46-47-48-49th). It’s what you get with zero political competition, where a cartel of outsider corporate suits, as represented by IACI & the Farm Bureau, wreck your economy with their corporatist model. Larry Johnson must be laughing on his yacht in the Pacific right now, “oh those gullible clucks in Idaho!”