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Supervalu posts higher sales, bigger loss for Q2

Acquisition by United Natural Foods gets go-ahead from regulators

Russell Redman

October 16, 2018

3 Min Read
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Just days after getting the green light to be acquired by United Natural Foods Inc., Supervalu Inc. reported an uptick in sales and a larger net loss for its fiscal 2019 second quarter.

In a 10-Q filing on Monday with the Securities and Exchange Commission, Supervalu said revenue for the quarter ended Sept. 8 rose 1.9% to $3.51 billion from $3.45 billion a year earlier.

The Minneapolis-based food distributor and retailer attributed the gain mainly to sales from acquisitions by Associated Grocers of Florida and Unified Grocers plus higher sales to new customers. Those increases were partially offset in part by reduced sales due to closed stores and stores no longer operated by customers, lower sales to existing customers, lower transition services agreement (TSA) fees and lower military sales.

Wholesale revenue climbed 3.6% to $2.84 billion for the second quarter, accounting for nearly 81% of Supervalu’s sales.

Sales at the company’s corporate-owned supermarkets fell 3.1% to $650 million, or 18.5% of total revenue, in the quarter. Same-store sales were flat versus an 0.2% increase in the prior-year period. The average basket size grew 1.8% year over year, while customer traffic fell 1.8%.

The fiscal 2019 quarter also included an operating loss of $62 million, compared with operating income of $17 million in the year-ago period.

Related:United Natural Foods tabs COO as Supervalu CEO

On the earnings side, Supervalu posted a second-quarter net loss of $57 million, or $1.49 per diluted share, compared with a net loss of $25 million, or 65 cents per diluted share, a year ago. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at $64 million, down from $94 million in the 2017 quarter.

For the fiscal 2019 first half, Supervalu totaled sales of $8.27 billion, a year-over-year gain of 18.7%. Wholesale revenue rose 25.6% to $6.65 billion, and retail sales dipped 1.6 to $1.55 billion. The company had an operating loss of $62 million for the period versus operating earnings of $61 million in the 2017 quarter, according to the SEC filing.

Supervalu’s bottom line for the 28-week first half showed a net loss of $78 million, or $2.04 per diluted share, compared with a net loss of $14 million, or 36 cents per diluted share, in the 2017 first half. Adjusted EBITDA was $162 million for the 2018 period versus $212 million the year before.

In an Oct. 12 SEC filing, Supervalu said the Federal Trade Commission has cleared the way for its deal to be acquired by United Natural Foods, as the Hart-Scott-Rodino waiting period expired. The companies expect the $2.9 billion transaction, announced in late July, to close in the fourth quarter of 2018, pending regulatory and shareholder approvals and other customary closing conditions.

Related:United Natural Foods to buy Supervalu for $2.9 billion

Plans call for United Natural Foods CEO Steve Spinner to lead the combined company, with the distributor’s chief operating officer, Sean Griffin, becoming CEO of Supervalu.

The merger also will mark Supervalu’s exit from the grocery retail business. Supervalu has steadily been divesting its corporate-owned stores, most recently in a sale of 19 Shop ‘n Save stores in the St. Louis area to Schnuck Markets Inc.

As of Sept. 8, Supervalu had 107 retail stores. The company supplied 3,394 stores as primary wholesale customers and 2,340 stores as secondary wholesale customers. Its total store network as of the fiscal 2019 second-quarter close was 5,841, compared with 5,368 a year earlier.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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