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Supervalu Boosts Cap-Ex Budget 26% to $1.2 Billion

MINNEAPOLIS -- Supervalu here said yesterday it expects to invest $1.2 billion in capital spending during fiscal 2008 as part of a four- or five-year spending effort to boost results at the Albertsons stores it acquired in June.

MINNEAPOLIS -- Supervalu here said yesterday it expects to invest $1.2 billion in capital spending during fiscal 2008 as part of a four- or five-year spending effort to boost results at the Albertsons stores it acquired in June. “Our goal is to have 80% of our fleet new or newly remodeled in the prior seven years, and the Supervalu legacy retail fleet is already at that metric,” Jeff Noddle, chairman and chief executive officer, said in a conference call discussing third-quarter results. About 65% of the acquired stores have been updated, he said. “With approximately 385 of the acquired stores below the desired metric and with stores aging every year, it will take us about four to five years to fully achieve that metric.” For fiscal 2008, which begins in late February, Noddle said Supervalu expects to do major remodels at between 100 and 110 stores and to open 25 to 30 new, standard-sized stores and between 60 and 80 limited assortment stores, including licensed locations. The $1.2 billion in capital expenditures represents a boost of approximately 26% over the $950 million Supervalu expects to spend through the end of the current fiscal year, Noddle said. Net income for the third quarter - which encompassed 12 weeks for Supervalu and 13 weeks for Albertsons -- rose 50.7% to $113 million on a sales increase of 127% to a record $10.7 billion. Sales in Supervalu's retail segment, which represents 80% of the total, were $8.4 billion, with $6.1 billion from the acquired stores accounting for 73% of the total. Sales at Supervalu's legacy retail stores were down approximately 8%, the company indicated, following the divestitutres of Cub Foods in Chicago, Shop ‘n Save in Pittsburgh and Deal$. Sales in Supervalu's supply chain services division rose 1.2% in the quarter to $2.2 billion, resulting from new business, which was partially offset by normal customer attrition. Identical-store sales for the quarter rose 0.6%; IDs at the acquired banners increased 1.1%, representing a boost of 0.8% over the second quarter; while IDs at legacy Supervalu stores fell 1.3%. For the 40-week period net income was up 66% to $332 million, with sales climbing 78.1% to $27.1 billion. -- Elliot Zwiebach