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Supervalu Reports Record 4Q Earnings

MINNEAPOLIS - Supervalu Inc. on Thursday reported record results for the 13-week fourth quarter of fiscal 2004, which ended Feb. 28. The company reported net sales of $5.0 billion compared to $4.6 billion last year, net earnings of $95.6 million compared to $63.9 million last year, and record diluted earnings per share of $0.70 compared to $0.48 last year.

Supervalu noted that fiscal 2004 was a 53-week fiscal year, resulting in an extra week in the fourth quarter, which generated approximately $360 million in net sales and contributed approximately $0.07 diluted earnings per share.

"Fiscal 2004 was an excellent year that represented a culmination of strategic activities and everyday execution. Our efforts resulted in broad-based sales momentum and industry leading comparable store sales, as well as improved financial metrics, including earnings growth and return on invested capital. We successfully navigated a sluggish economy and competitive activity while implementing sizable initiatives across our company," said Supervalu chairman and c.e.o. Jeff Noddle.

In the company's retail food segment, fourth-quarter net sales were $2.8 billion, an increase of 10.9 percent compared to last year, primarily reflecting new store growth, comparable store sales improvement, and the impact of the extra week in the quarter. Comparable store sales were 2.5 percent, based on a comparable 12-week period, reflecting broad-based improvement across the Supervalu retail network, including positive comparable store sales at Save-A-Lot. Comparable store sales improvement reflected local merchandising programs and modest overall product inflation compared to last year, the company said.

Commenting on Sav-A-Lot, Piper Jaffray senior analyst Eric Larson said, "Sav-A-Lot continues to be the star performer within the retail segment and is also outperforming most other retail grocery store concepts. Square footage growth was modestly below our forecast in fiscal 2005, but the company is taking additional time while introducing general merchandise into new stores, making sure the concept delivers on its promises."

Meanwhile Supervalu's fourth-quarter distribution net sales were $2.3 billion, an increase of 7.5 percent compared to last year, due primarily to the extra week in the quarter.

Distribution net sales for the fourth quarter also reflect the impact of new business, including new business from former Fleming customers, affiliated since the first quarter of fiscal 2004, which Supervalu said was fully offset by the net sales loss from its asset exchange with C&S, the exit of the Denver operation, and continued customer attrition.

Commenting on Supervalu's business outlook, Noddle said, "Supervalu is very well positioned in the retailing channel with both its regional and national banner formats. Our strategy combines our strengths with consumers desire for excellent value and service. Supervalu's distribution operation will continue to pursue business growth in both traditional and third party logistics while maintaining its tradition of strong service and technology solutions. We are confident that the successful implementation of our strategies will enhance our leadership position in this country's food channel."

The company said its 2005 store development plans include: 110 to 140 new extreme value food combination stores; 40 to 50 extreme value combination store conversions; eight to 10 new regional banner stores; and approximately 30 regional banner major store remodels.
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