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Supervalu outlook cautious even as profits improve


EDEN PRAIRIE, Minn. — Supervalu reduced it full-year profit forecast Wednesday morning, even though the company reported better-than-expected second-quarter sales and profits as a result of strategies president and CEO Craig Herkert said are yielding results.

“Our eight plays to win strategy is gaining traction, and we remain on plan with our business transformation,” Herkert said. “Increased discipline and analytical tools are helping to advance hyper local retailing initiatives, which are starting to have a positive impact on our customers’ shopping experience.”

Even so, Herkert tempered his outlook for the remainder of the year by tightening the full-year earnings per share forecast to a range of $1.20 to $1.30, down from a range of $1.20 to $1.40 that was provided at the end of the fourth quarter and reaffirmed at the end of the first quarter.

“While I am encouraged by our execution, I remain mindful of the challenging economy and its impact on consumer behavior. As we move into the second half of our fiscal year, Supervalu remains focused on its strategy and meeting the needs of its customers.”

During the second quarter ended Sept. 10, Supervalu reported earnings per share of 28 cents, much better than the 21 cents a share analysts forecast and vastly superior to the prior-year second-quarter loss of $6.94 cents a share that was driven by a $1.6 billion a goodwill and intangible asset impairment charge.

While the profit performance looked good, sales growth was muted. Total sales declined slightly to approximately $8.4 billion from $8.6 billion while sales at the company’s food retailing division declined to approximately $6.6 billion from $6.7 billion. The sales decline was caused by the exit from several markets and a 1.8 percent drop in identical store sales. Also impacting total company sales was a decline in the company’s independent business sales group which dropped to $1.8 billion from $2 billion and was primarily attributed to Target’s transition to self-distribution and the sale of Total Logistic Control in the fourth quarter.

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