Supervalu Net Sales Up in Q4

Looking ahead to a focus on driving overall sales growth in the next fiscal year, Supervalu Inc. finished its 2014 fourth quarter with positive net sales and store growth on the rise.

Q4 net sales at Supervalu were $3.95 billion, compared to $3.9 billion last year, an increase of 1.4 percent. Identical store sales in the Save-A-Lot network were up 2.1 percent; sales for corporate Save-A-Lot stores were up 3.5 percent. Identical store sales in the Retail Food segment were up 0.2 percent, while total sales within the Independent Business segment decreased 0.6 percent, blamed chiefly on losing two large customers and lower military sales.

"Fiscal 2014 was an important transition year for Supervalu as we stabilized the organization and set the foundation for our future,” said President and CEO Sam Duncan. “I am pleased with the direction of our business segments and look forward to the new fiscal year where we can focus our attention on driving sales growth across the organization.”

Q4 adjusted net earnings from continuing operations were $48 million, or 18 cents per diluted share. Net loss from continuing operations for last year’s fourth quarter was $174 million, or 82 cents per diluted share, and included $149 million in after-tax costs and charges primarily for non-cash asset impairments and employee severance. When adjusted for these items, Q4 fiscal 2013 net loss from continuing operations was $25 million, or 11 cents per diluted share. Net loss from discontinued operations in Q4 was $14 million.

Continuing Operations

Q4 gross profit was $590 million, or 14.9 percent of net sales, versus $557 million, or 14.3 percent of net sales, a year ago. Adjusted selling and administrative expenses were $463 million, or 11.7 percent of net sales, versus $522 million adjusted last year. The decline in expenses was primarily driven by the benefits of cost reduction initiatives and lower surplus property charges.

Independent Business

Q4 Independent Business net sales were $1.82 billion compared to $1.83 billion last year, a decrease of 0.6 percent. Adjusted operating earnings were $58 million, or 3.2 percent of net sales, versus $50 million last year. The increase in earnings was primarily attributable to lower bad debt expense and cost reduction initiatives.

Save-A-Lot

Q4 Save-A-Lot net sales were $999 million compared to $969 million last year, an increase of 3.1 percent, reflecting the impact from network identical store sales of positive 2.1 percent. Identical store sales for corporate stores within the Save-A-Lot network were up 3.5 percent.

Save-A-Lot's Q4 operating earnings were $43 million, or 4.3 percent of net sales, compared to adjusted earnings last year of $49 million. The decrease in Save-A-Lot adjusted operating earnings was primarily attributable to incremental investments to lower prices to customers offset in part by the benefits of cost reduction initiatives.

Retail Food

Q4 Retail Food net sales were $1.09 billion compared to $1.09 billion last year. Identical store sales were positive 0.2 percent. Adjusted Q4 operating earnings were $38 million, or 3.5 percent of net sales, versus last year’s $14 million, or 1.3 percent of net sales, a difference driven by the benefit of cost reduction initiatives, including lower depreciation expense.

Minneapolis-based Supervalu operates a network of 3,339 stores composed of 1,819 independent stores serviced primarily by the company’s food distribution business, 1,330 Save-A-Lot stores, of which 948 are operated by licensee owners; and 190 traditional retail grocery stores.