Supervalu on Tuesday said it has begun preparations for a potential public spinoff of its Save-A-Lot business.
The move would help Supervalu cash in on momentum from its most profitable division and allow the Minneapolis-based company to focus on its core retail banners and its independent distribution customers.
“Over the last two and a half years, Save-A-Lot has repositioned its brand, refocused its efforts on fresh produce and meat, and remerchandised its stores and product offerings to better appeal to a broader group of customers,” Sam Duncan, Supervalu’s president and CEO, said in a statement.
“Today’s announcement reflects our commitment to continuing to explore ways to maximize value for our shareholders. We believe a separation of our Save-A-Lot business could allow Save-A-Lot, our independent business and our retail food banners to better focus on their respective operations, and pursue strategies specific to their business characteristics and growth potentials, for the benefit of our shareholders, customers, licensees and employees.”
Supervalu noted that no specific timetable for a separation has been set and there can be no assurance that a separation of Save-A-Lot will be completed or that any other change in the Company’s overall structure or business model will occur. Supervalu has engaged Barclays and Greenhill to serve as financial advisors, and Wachtell, Lipton, Rosen and Katz as legal advisor, in connection with the possible separation.
The announcement came as Supervalu reviewed financial results for the fiscal first quarter ended June 20. Led by a 3.8% sales increase and margin improvements at Save-A-Lot, the company posted $5.4 billion in net sales, a 2.8% increase. Net earnings from continuing operations of $63 million increased by 31.3% from the same period last year.
Save-A-Lot includes 1,300 total stores, comprised of 430 corporate stores and approximately 900 stores operated by licensees. The division in the first quarter accounted for $1.4 billion in sales. Corporate stores recorded a 2.8% increase in comp sales while overall division comps improved by 0.6%.
Retail food division sales of $1.5 billion improved by 3% with comps down by 0.3%. Independent business sales were up by 1.7% to $2.5 billion.
|Suggested Categories||More from Supermarket News|