Supervalu Accelerates EDLP

Supervalu plans to accelerate its use of everyday pricing in certain highly promotional categories at several banners sooner than we had originally anticipated, Jeff Noddle, chairman and chief executive officer, told investors last week at the Morgan Stanley Global Consumer & Retail Conference. In response to a question, Noddle said, We've recognized there are certain categories at traditional

NEW YORK — Supervalu plans to accelerate its use of everyday pricing in certain highly promotional categories at several banners “sooner than we had originally anticipated,” Jeff Noddle, chairman and chief executive officer, told investors here last week at the Morgan Stanley Global Consumer & Retail Conference.

In response to a question, Noddle said, “We've recognized there are certain categories at traditional formats where we and other operators have trained consumers to buy only when the items are on sale, such as cereal, and that those categories might do better with everyday pricing rather than promotional pricing.

“We've begun introducing that kind of pricing in some sections at Shaw's and Acme, and we will do it at other banners sooner than we originally anticipated.”

He did not elaborate.

Noddle used part of his presentation to reassure investors that, for Supervalu's retail banners, “Good things are just around the corner” — the tag line for its advertising across all banners.

Despite disappointing results in the second quarter, he said, “We have ample liquidity to meet our foreseeable needs.

“While integration risks remain, we've made considerable progress to date. We have more leverage than our peers, but we have strong financial disciplines to provide flexibility in our debt structure and cash flows.”

Asked whether Supervalu would consider deferring some capital spending to next year to accelerate debt repayment, Noddle said the company would consider it.

“It would be prudent to be tighter on capital spending next year, and we have the financial flexibility to do that — perhaps more than the market gives us credit for, given that we have $400 million in free cash flow and $1.1 billion to $1.2 billion earmarked for capital spending, plus we're nowhere near reaching our covenants.”

Noddle said aggressive store remodels are boosting sales by 6%, prompting a questioner to point out that Kroger Co., Cincinnati, is achieving comparable-store sales of 5% to 6% for the entire chain.

Noddle said the goal for the Albertsons properties Supervalu acquired in mid-2006 was never to boost comps significantly, “because we knew all those stores needed remodeling, and we didn't intend to introduce major price initiatives until store standards were raised and the shopping environment improved.”