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Supervalu 2Q earnings flat; sales down sharply

Supervalu 2Q earnings flat; sales down sharply

Save-A-Lot comps down 5.2%

Supervalu on Wednesday reported flat net earnings on a 4.8% decline in sales during the fiscal second quarter — results largely in line with expectations.

Sales for the period which ended Sept. 10, totaled $3.9 billion and were down in all its divisions. As the company pre-reported last month, identical store sales declines in its retail and Save-A-Lot divisions accelerated from first quarter levels as they absorbed the impact of price deflation, increased competition, and declines in SNAP participants and benefits. Wholesale volume was down by 5.5%, primarily due to customer defections since the same period last year, partially offset by new business.

Sales for the 200 stores making up the company's retail division decreased by 5.4% to $1 billion for the period, and same-store sales fell by 5.9%. The division posted an $8 million loss in the period.

The Save-A-Lot discount division, which Supervalu earlier this week announced would be sold to a private equity holder, saw its sales for the period decline by 2.8% to $1.1 billion on a 5.2% drop in comparable store sales. Save-A-Lot operating earnings of $22 million, or 2.1% of sales, were down by 33% from the same period last year.

Wholesale sales totaled $1.7 billion and operating earnings for the division were $58 million, including a $9 million fee associated with a customer termination. Adjusted for that fee, operating earnings were flat vs. the same period last year.

“As we expected, the transformation of our business continues to take time, but I am optimistic about our ability to grow our wholesale business by adding new customers, securing long-term supply agreements with existing customers, and expanding overall product sales to all customers,” Supervalu CEO Mark Gross said in a statement. “We expect wholesale sales in the second half of this year to be higher than last year as we add new customers, grow our base business, and cycle select customer losses from last year.”

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