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Supervalu Q4 Profits Up 30 Percent

Higher sales, lower expenses, and a lighter debt load is helping Supervalu move the needle forward, as evidenced in fourth quarter earnings gains of 30 percent gain to $156 million, or 73 cents per share, from $120 million, or 57 cents in the same period last year.

While fourth quarter net sales of $10.4 billion was up just slightly from last yearís $10.3 billion tab, revenues for fiscal 2008 -- which includes 52 weeks of operations from the June 2006 acquisition of Albertsons premier retail properties vs. 38 weeks accounted for last year -- climbed 18 percent to $44 billion vs. $37.4 billion last year. The company reported net earnings of $593 million, or earnings per share of $2.76, for the 2008 fiscal year, up 31 percent compared to $452 million, or earnings per share of $2.32 last year.

Jeff Noddle, Supervalu chairman and c.e.o., said smaller interest expenses due to borrowing less and paying off debt is helping to boost the bottom line. ìIn fiscal 2008, we achieved many important milestones, including record net sales and earnings, $40 million in pretax synergies and a second year of double-digit diluted earnings per share growth following our transformational acquisition,î he said.

Looking toward fiscal 2009, Noddle said Supervalu remains focused on integration initiatives, including the implementation of key merchandising programs and the continued migration of the Premium, Fresh and Healthy store remodeling program.

Supervalu's fourth quarter retail sales were $8.1 billion vs. $8.2 billion last year, primarily reflecting the impact of store closures in the acquired operations combined with flat identical store sales. Retail square footage decreased 2.5 percent from the fourth quarter of fiscal 2007 with the previously announced closure of underperforming stores, which more than offset new store square footage. When excluding store closures, Supervaluís total retail square footage increased 2.3 percent over the fourth quarter of fiscal 2007.

Supervalu's supply chain services also helped with a 7.2 percent net sales gain of $2.3 billion vs. $2.1 billion in last yearís fourth quarter, primarily as a result of new business growth and lower than normal customer attrition. Fourth quarter fiscal 2008 and fourth quarter fiscal 2007 results included after-tax charges for one-time acquisition-related costs of $9 million and $11 million, respectively, or $0.04 and $0.05 per diluted share, respectively.

With a $1.3 billion capital spending purse for fiscal 2008 ñ which includes the acquisition of eight stores in Wyoming and approximately $36 million in capital leases ñ the companyís fiscal 2008 scorecard shows 141 major remodels, 25 minor remodels and 27 new stores.

Further, the company's total debt-to-capital ratio was 60 percent at the end of fiscal 2008 vs. 64 percent at the end of fiscal 2007. "Our strong cash flow management has enabled us to significantly reduce debt, beating our goal of $400 million by June 2008," said Noddle, adding that the Minneapolis-based retailer/distributor is committed to an additional $400 million debt reduction for fiscal 2009.

Shares of Supervalu climbed $1.41, or nearly 5 percent, to $30.46 Thursday.
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