MINNEAPOLIS — Supervalu slowed the pace of its sales declines in the first quarter and delivered better bottom-line results than anticipated as pricing and operations initiatives began to take hold at the beleaguered retailer.
Although identical-store sales at Supervalu’s retail and Save-A-Lot divisions declined during the quarter, Sam Duncan, chief executive officer, emphasized that the declines improved sequentially from the fourth quarter. ID sales at retail stores, down 3% in the quarter, which ended June 15, improved from a 4.1% decline in the fourth quarter. Save-A-Lot ID sales declined 1.9% vs. a 2.6% fourth-quarter decline.
For the quarter, which ended June 15, Supervalu reported net income of $85 million on $5.16 billion in sales. Net loss from continuing operations was $105 million, and included $139 million in after-tax charges. When adjusted for these charges, first quarter net earnings from continuing operations totaled $34 million. In the year-ago first quarter, the net loss from continuing operations was $18 million.
Supervalu in March sold its Albertsons, Jewel-Osco, Acme and Shaw’s/Star Market banners to a private equity consortium and focused on its legacy supermarket banners, wholesale business and the discount Save-A-Lot brand. The latter, comprised of corporate and licensed stores, needed particular attention on price to win back shoppers and the confidence of independent owners, Duncan noted.
A decision in the first quarter to invest 50 basis points of inside margin in lower prices for select items at Save-A-Lot improved sales of those items by more than 25% and improved customer price perception, Duncan said. An additional 50 basis points of margin is being invested in the current quarter at Save-A-Lot, he added.
While Duncan said pricing was “critical,” especially at Save-A-Lot, he insisted the company had most to gain by improving operations at all its retail banners. Save-A-Lot stores, for example, are benefiting as a result of new merchandising displays for bananas and bulk products. And at traditional retail banners, initiatives to reset Center Store departments, eliminate aisle clutter and improve buying specifications in fresh are making a difference.
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“I am very sincere when I say this — pricing was not our biggest issue in our operations. It was the operations itself,” Duncan said.
“Time will tell but we’re going to focus on what we are going focus on and do the best we can and make the investments to achieve positive ID sales for this company,” he added. “Now how long will that take? My hope … is that by year-end to get it turned and we’re going to continue to be focused on that. But we have plenty to work on in my opinion on the merchandising side to get the results that we wish.”
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