MINNEAPOLIS -- Supervalu here said improved corporate retail sales led the way to a year of solid growth in fiscal 1997.
officer, said corporate retail sales increased 7% while same-store sales increased 2%. The company opened or acquired 50 new stores and completed 16 major renovations, increasing square footage by about 9%, Wright said. Supervalu ended the year with 322 stores in 25 states. Sales for its corporate retail businesses were $4.7 billion
"We are very bullish on the performance of our corporate retail operations and look forward to continuing strong growth in this area,"
Wright said operating earnings showed a dramatic improvement, increasing 64% to just under $94 million.
"This tremendous increase was due to the sales improvement which we enjoyed during the year, improved gross margins and very tight expense controls," Wright told shareholders. "In particular, earnings benefited from the reduction of administrative expenses in most of the companies."
Wright focused on three corporate retail operations: Cub Foods, the market-share leader in the Twin Cities; Shop 'N Save, the rapidly growing chain of 33 stores in the St. Louis area; and Save-A-Lot, the limited-assortment chain of 638 stores (137 of which are corporately owned).
"Save-A-Lot is already a substantial business and has been growing at a tremendous rate," Wright said. "We expect it to continue to do so and have budgeted 30 new corporate and 80 new licensed stores for this coming fiscal year."
Jeff Girard, executive vice president and chief financial officer, said sales were about $16.6 billion, compared with $16.5 billion last year. As reported in SN, net earnings increased 5.2% to $175 million, or $2.60 per share, compared with $166.4 million, or $2.44 per share, the previous year.
"These results were driven by improved gross-profit margin in both the wholesale and retail business segments of the company, and particularly strong expense controls in the retail chains," he said.
Jeff Noddle, executive vice president, president and chief operating officer for wholesale companies, said Supervalu's 31 distribution centers -- two of which were added during the year -- did $14.5 billion in wholesale volume to some 4,300 retail food stores before inter-company eliminations.
Girard repeated Supervalu's announcement that it will spend $400 million on capital projects in the new fiscal year, half of which -- $200 million -- will go toward the distribution businesses. About 35%, or $136 million, is budgeted for corporate retail businesses. About $60 million will be invested in new technology, he said.
The company also said it expects its divestiture of ShopKo Stores, Green Bay, Wis., to be completed in early July. As reported, Supervalu agreed to sell its 46% stake -- 14.8 million shares -- of the regional discount chain in a linked, two-step transaction. In the first step, Supervalu sold 8.2 million shares to ShopKo at $18.35 per share.
Supervalu will soon make a secondary offering of about 6.6 million shares at a price still to be determined, but expected to be at least $18.35 per share.
Supervalu will use the ShopKo proceeds to repurchase Supervalu stock. To date, it has repurchased about 900,000 shares, Girard said.