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Supervalu Posts Q2 Loss, Rethinks Price Investments

MINNEAPOLIS — Supervalu here said Thursday that it recorded a loss of $111 million in the fiscal second quarter on a 4.6% decline in sales, to $8 billion.

Same-store sales in the company’s retail food division fell 4.3% for the quarter, and same-store sales in the Save-A-Lot division were down 3.7%.

The loss for the 12-week quarter, which ended Sept. 8, was mostly due to non-cash charges for asset impairment and previously announced store closures. The operating loss in the quarter totaled $41 million, vs. operating income of $216 million in the year-ago quarter. Net income was $60 million in the year-ago period.

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In the retail food segment, the operating loss was $83 million, including $142 million in net pre-tax charges related to intangible and other asset impairments, previously announced store closures and employee-related costs, partially offset by the gain on sale of assets. Excluding these items, operating earnings were $59 million in the retail food segment, vs. $127 million in the year-ago quarter. Retail segment sales were down 7.3% to $5.2 billion.

Wayne Sales, Supervalu’s chairman, president and chief executive officer, said the company was “pleased with the initial results” of its price investments in the Jewel-Osco division in Chicago, but he added that Supervalu is “assessing its on-going approach to price investments, its value proposition and how it goes to market.

“As such, the timing of repositioning half our stores will extend past the end of fiscal 2013,” he said in the earnings statement.

As previously reported, Supervalu is exploring strategic alternatives for the future of the company, including the possible sale of all or parts of it.

The Save-A-Lot limited-assortment store division posted operating earnings of $18 million for the quarter, including $16 million in pre-tax charges primarily related to store closure costs. Excluding those costs, operating earnings were $34 million, vs. $50 million a year ago. Sales were up 0.1%, to $973 million.

In the company’s wholesaling division, operating earnings were down about 10.7%, to $50 million, on a sales increase of about 1.1%, to $1.87 billion.

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