Supervalu Posts Q4 Profits on Lower Sales; Noddle, Four Others to Depart Board

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Supervalu Posts Q4 Profits on Lower Sales; Noddle, Four Others to Depart Board

Although Supervalu’s cost-cutting measures during the fourth quarter affected sales, the Minneapolis-based retailer delivered a profit of $97 million, or 46 cents per share, vs. a loss of $201 million, or 95 cents, that it posted in the year-ago period.

Excluding charges related to some stores that it closed or sold last year, the company would have earned $131 million, or 62 cents per share, beating analyst estimates of 61 cents per share.

During the quarter ended Feb. 27, Supervalu’s retail food sales fell 15 percent to $7.2 billion; ditto for supply chain services, whose sales also slipped nearly 15 percent to $2 billion. Total net sales, meanwhile, fell nearly 15 percent to $9.2 billion while same-store sales declined 6.8 percent.

Last year’s fourth-quarter tally also included the 53rd week of the year, which provided sales benefit of approximately $0.8 billion and added an estimated six cents to diluted earnings per share. When adjusting for the 53rd-week benefit and impairment charges related to the closure of non-strategic stores, and settlement costs related to a pre-acquisition Albertsons litigation matter, fourth-quarter fiscal 2009 net sales came to $10 billion, and earnings per diluted share were 81 cents.

In fiscal year 2010, Supervalu posted $40.6 billion in sales and earnings of $393 million, or $1.85 per share, while in 2009, the company netted $44.5 billion in sales amid a $2.8 billion loss.

For the present fiscal year, Supervalu expects sales of about $39 billion and earnings per share in the range of $1.65 to $1.85, including about 10 cents per share in additional charges related to its exit of the Connecticut and Cincinnati markets.

While Supervalu’s fiscal 2010 met its earnings guidance and exceeded its annual debt reduction target, Craig Herkert, president and CEO, acknowledged an uphill climb ahead, but remained upbeat. “My team is in place, we know what needs to get done, and we will execute,” he said. “Yes, there will be challenges to overcome, but fiscal 2011 will deliver solid earnings, meaningful debt reduction and the necessary platform from which to execute our vision of becoming America’s Neighborhood Grocer. Our renewed focus on consumers, center-led merchandising and marketing leadership and capabilities, strict capital disciplines, and an unrelenting focus on cost reduction are our priorities for fiscal 2011 to position us for growth in fiscal 2012 and beyond.”

In related news, Supervalu is changing the size and composition of its board of directors, including reducing current board membership from 15 to 12 directors, adding two new directors to bring new perspectives to the board’s oversight of the company, and naming a non-executive chairman.

As planned following his 2009 retirement announcement, Jeff Noddle, 63, current chairman of the board and former CEO, will retire at the company’s annual meeting in June 2010. Also set to depart Supervalu’s board is Lawrence A. Del Santo, 76, who has been a director since 1997 and lead director since 2006, and Garnett L. Keith Jr., 74. In addition, A. Gary Ames, 65, and Marissa T. Peterson, age 48, whose terms would expire in 2011, voluntarily resigned from the board effective April 14, 2010.

Nominated for two board posts are Matthew E. Rubel, 52, chairman, CEO and president of the footwear, accessory and lifestyle brand company Collective Brands, Inc. (owner of Payless ShoeSource), and Donald R. Chappel, 58, SVP/CFO of The Williams Companies, Inc., an energy transmission company, both of whom will stand for election at the company’s annual meeting.

Wayne C. Sales, 60, retired vice chairman of Canadian Tire Corp., Ltd., and a Supervalu director since the Albertsons acquisition in 2006, will be tapped for the newly created position of non-executive chairman following the annual meeting.

“The board is grateful for the leadership that Jeff and Larry have provided, and the important contributions of all of our directors,” said Sales. Those contributions include “their execution of a successful transition to new leadership under Craig Herkert, the guidance they have provided to help Supervalu navigate through the recent economic environment while maintaining its focus on long-term value creation, and their dedication to the highest standards of board governance.”

Upon the completion of these changes, 11 of the company’s 12 directors will be independent directors under New York Stock Exchange listing standards.

Supervalu has a network of about 4,290 stores composed of approximately 1,160 traditional retail stores, including 840 in-store pharmacies; 1,190 hard-discount stores, of which 855 are operated by licensee owners; and 1,940 independent stores serviced primarily by the company’s traditional food distribution business.