The performance of Save-A-Lot continued to improve in the fiscal third quarter, Minneapolis-based Supervalu said Thursday.
Identical-store sales at the limited-assortment banner rose 1.7% in the quarter, buoyed by IDs of 5.4% at corporately owned Save-A-Lots. Operating income at the chain was up 48%, to $27 million, which the company attributed largely to cost reductions made early in the year. Save-A-Lot sales were up 2.6%, to $991 million.
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“Save-A-Lot's results this quarter continue to reflect the benefits from their fresh cut meat program that we are rolling out to our corporate stores,” said Sam Duncan, president and CEO, Supervalu, in a conference call with analysts. He also credited a “renewed focus on produce across the entire store network, the reduction in inside margin made during the first two quarters of the year and perhaps more importantly, the greater level of confidence that our licensees have in Save-A-Lot and the Save-A-Lot team.”
He said both customer counts and average ticket were up at corporate stores.
Duncan also noted that the cuts in SNAP benefits appear to have had a negative impact on Save-A-Lot’s sales of “less than 1%,” and that customers also appear to be offsetting reduced food-stamp benefits with cash purchases.
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Sales in Supervalu’s conventional retail food stores were down for the quarter, however, as were sales in the wholesale division. Retail food sales were down 2.6%, $1.06 billion, reflecting IDs of -1.9%. Wholesale sales to independents were down 3.7%, to $1.91 billion, which the company attributed to lower sales to existing customers, including military, and two larger lost customers, partly offset by net new business.
Overall, Supervalu said net income from continuing operations in the third quarter, which ended Nov. 30, totaled $32 million, vs. a loss of $15 million in the year-ago third quarter. Total sales declined 1%, to $4.01 billion.
For the 40-week, year-to-date period, net income totaled $156 million, vs. a loss of $54 million in the year-ago, 40-week span. Sales through the first three quarters were down less than 1%, to $13.2 billion.
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