Q2 Sales Down, Earnings Up at Supervalu

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Q2 Sales Down, Earnings Up at Supervalu


Supervalu Inc. reported second quarter fiscal 2012 net sales of $8.4 billion and net earnings of $60 million, or 28 cents per diluted share.

Sales are down a bit from the year-ago period, when the company reported net sales of $8.7 billion and a net loss of $1.47 billion; Q2 FY 2011 net earnings were $59 million.

“Our ‘8 Plays to Win’ strategy is gaining traction and we remain on plan with our business transformation,” said Craig Herkert, Supervalu CEO and president. “Increased discipline and analytical tools are helping to advance hyper local retailing initiatives, which are starting to have a positive impact on our customers’ shopping experience. While I am encouraged by our execution, I remain mindful of the challenging economy and its impact on consumer behavior. As we move into the second half of our fiscal year, Supervalu remains focused on its strategy and meeting the needs of its customers.”

Q2 retail food net sales were $6.6 billion, compared to $6.7 billion last year, reflecting identical store sales of -1.8 percent and previously announced market exits. Q2 independent business net sales were $1.8 billion, compared to $2 billion last year, a decrease of 5.8 percent, primarily attributed to Target’s transition to self-distribution and the divestiture of Total Logistic Control, which occurred in Q4 FY 2011.

Gross profit margin for the second quarter was $1.9 billion, or 22.2 percent of net sales, compared to $1.9 billion or 22.3 percent of net sales last year. This reflects a higher LIFO charge and the impact of higher fuel sales. Partially offsetting these items were the benefits of promotional effectiveness and reduced shrink.

Year-to-date capital expenditures were $267 million, compared to $312 million for the same period last year.

Supervalu is updating its full-year guidance and expects to generate FY 2012 earnings per diluted share of $1.20 to $1.30. “Midway through our fiscal year, we have more clarity on earnings performance and have tightened guidance to reflect our outlook,” Herkert said.

Net sales for the 52-week fiscal year are estimated to be about $36.5 billion compared to $37 billion previously, reflecting the sale of a number of company-owned fuel centers, as well as lower sales in the independent business segment attributable to the timing of planned new business. Sales in the independent business segment are expected to be down approximately 3.5 percent to 4.5 percent from fiscal 2011. Same-store sales are expected to drop 2 to 2.5 percent.

Minneapolis-based Supervalu Inc. operates 4,300 stores composed of 1,106 traditional retail stores, including 800 in-store pharmacies; 1,294 hard-discount stores, of which 915 are operated by licensee owners; and 1,900 independent stores serviced primarily by the company’s traditional food distribution business.