Supervalu Sees Shoppers Adjusting

Supervalu said last week that shoppers seem to be seeking out more promotions, buying more store brands and using more coupons as a result of the soft economy and rising food prices. In a conference call with analysts discussing its fourth-quarter earnings, Jeff Noddle, Supervalu's chairman and chief executive officer, also said food retailers have been more aggressively promotional

MINNEAPOLIS — Supervalu here said last week that shoppers seem to be seeking out more promotions, buying more store brands and using more coupons as a result of the soft economy and rising food prices.

In a conference call with analysts discussing its fourth-quarter earnings, Jeff Noddle, Supervalu's chairman and chief executive officer, also said food retailers have been more aggressively promotional in the current environment but have continued to pass cost increases along to consumers in the form of higher retail prices.

“We don't see anybody really using inflation or not passing through inflation as a competitive strategic marketing tool,” he said. “It's been pretty orderly.”

He said customers are adjusting to inflation — which remained in the 3%-plus range but was shifting away from fresh foods and toward more commodities and CPG goods — in part by consolidating shopping trips. The company saw weaker store traffic in the fourth quarter, but larger baskets.

Also during the call, Duncan Mac Naughton, executive vice president, marketing and merchandising, said Supervalu has created a brand meal-solution area in some stores and is planning to add national store brands in several other categories following the recent introduction of Wild Harvest as a national natural and organic line.

The “Simply Good Meals” meal-solution program, located in the deli department, consists of a self-service island with “restaurant-quality, easy-to-assemble meals, right down to the recipe,” he said. That offering, along with a recently developed hot-and-cold soup bar, will be rolled out to certain “demographically appropriate” stores in 2009.

For the fourth quarter, which ended Feb. 23, Supervalu reported $156 million in net income, up 30% over year-ago results, on a slight sales gain, to $10.4 billion. For the full year — the first year to include a full 52 weeks of Albertsons results — net income was up 31.2%, to $593 million, on a 17.8% gain in sales, to $44 billion.

The company said its distribution business had an exceptionally strong fourth quarter, with sales up 7.2%, to $2.3 billion, primarily because of new business and lower-than-usual attrition.

Retail sales for the fourth quarter were down slightly, to $8.1 billion, primarily due to store closures. Identical-store sales were flat.