Net Sales Up, Earnings Down in Supervalu’s Q1
While consolidated net sales rose more than 6 percent over last year’s first-quarter results for Supervalu Inc., a dip in same-store sales stifled growth in the company’s retail operations.
Total sales hit $4 billion in Q1, an increase of $239 million from a year ago. Net sales for Minneapolis-based Supervalu’s wholesale operations rose 12.4 percent to $2.56 billion, while retail sales fell 2.7 percent to $1.39 billion. Q1 net earnings from continuing operations dropped to $12 million from $20 million a year ago.
Supervalu’s Q1 fiscal year 2018 results come a day after the grocery wholesaler and retailer announced a 1-for-7 reverse stock split. The move, which reduces the number of Supervalu shares to 38.4 million from 268.5 million, is designed to pacify wary investors.
“The results generated this quarter by our wholesale business were outstanding and demonstrate our ability to deliver on our strategy and commitment toward growing this segment,” said Supervalu President and CEO Mark Gross. “Additionally, we’re thrilled that we closed on the acquisition of Unified Grocers shortly after the end of our first quarter, and we’re now working together as one team to drive the business and integration efforts forward. We’ll begin reporting results in our second fiscal quarter that include the Unified business.”
Wholesale Operations
Q1 wholesale net sales were $2.56 billion, compared to $2.28 billion last year, an increase of 12.4 percent. The net sales increase is primarily due to sales to new customers and increased sales to new stores operated by existing customers, partially offset by stores no longer being supplied by Supervalu and lower military sales.
Retail Operations
Retail net sales in Q1 were $1.39 billion, compared to $1.43 billion last year, a decrease of 2.7 percent. The net sales decrease reflects a drop in identical store sales of 4.9 percent and closed stores, partially offset by sales from acquired and new stores.
Retail operating loss in Q1 was $4 million, or -0.3 percent of net sales and included $1 million of severance costs, which were offset by $1 million of a gain from a store closure
Fiscal 2018 Outlook
Supervalu expects net earnings from continuing operations to be in the range of $51 million to $70 million. Adjusted EBITDA, including the contribution from Unified Grocers, is expected to be in the range of $475 million to $495 million.
With annual sales of around $13 billion, Supervalu Inc. serves customers across the United States through a network of 2,289 stores composed of 2,072 stores operated by wholesale customers serviced primarily by Supervalu’s food distribution business, and 217 traditional retail grocery stores operated under five retail banners in six geographic regions.