MINNEAPOLIS — Supervalu here is undergoing a “business transformation” that it hopes will enable it to offer pricing more in line with competition along with more effective promotions, Craig Herkert, president and chief executive officer, said here Tuesday.
However, during a conference call as Herkert told analysts the direction Supervalu hopes to move, he was repeatedly challenged on how he expects to reverse the company's negative trajectory, which saw an earnings loss and declining sales during the third quarter and 40 weeks that ended Dec. 4. The loss for the 12-week quarter was $202 million, with sales down 5.9% to $8.7 billion, and identical-store sales in the retail food division falling 4.9%. For the year to date the loss was $1.6 billion, while sales fell 8% to $28.9 billion.
Based on third-quarter results, Supervalu said it was lowering its financial guidance for the year, projecting a net loss in the range of $7.19 to $7.09 per share, with food sales likely to decline approximately 3.5% and ID sales to drop to negative 6%.
Herkert said third-quarter ID sales in its three Northeast banners — Acme, Shaw's and Shoppers Food Warehouse — were down in the high single digits, while IDs at the Jewel banner in Chicago were slightly above the overall corporate decline.
Given those declines, one analyst asked Herkert, “What makes you think the problems at these banners are actually fixable?”
“Clearly in some parts of each banner we have some challenges,” Herkert replied. “But we have leading market shares in each banner and we have very, very successful stores within each banner. So at the granular level we know [implementing certain initiatives] works.”
“I'm in a lot of your stores, and I haven't seen anything like that working,” the analyst shot back, to which Herkert replied, “I travel every week to visit stores, and I actually see a lot of good things going on out there — clearly not at the level we need, or we would have better results right now. But the engagement we get from our store directors and department managers with their new-found authority to do things locally is really powerful.”