While wholesale operations continue to outpace retail performance at Supervalu Inc., the Minneapolis-based grocery operator posted a 31-percent boost in consolidated net sales for the third quarter of its 2018 fiscal year.
Total sales in Q3 were $3.94 billion, an increase of $935 million over the same period a year ago. Meanwhile, last year’s acquisition of Unified Grocers drove net sales of wholesale operations in Q3 to $2.89 billion, an increase of $982 million, or more than 50 percent, over the year-ago period.
The Unified merger has contributed about $860 million in sales to the bottom line this fiscal year, and Supervalu is hoping for similar results following its acquisition of Associated Grocers of Florida, completed in Q4. Third-quarter net earnings from continuing operations were $18 million.
"We're pleased to have completed our acquisition of AG Florida early in the fourth quarter," said President and CEO Mark Gross. "The work done in the third quarter concluded with this deal which, combined with the acquisition of Unified Grocers earlier this fiscal year, demonstrates our commitment to the strategic growth of our wholesale business. Furthermore, we're extremely pleased with the integration work at Unified and the progress made in that market."
Performance of Supervalu’s retail operations was not as robust, however. Retail net sales in Q3 dropped 4.1 percent to $1.02 billion, a slip that reflects a identical-store sales decline of 3.5 percent and closed stores, partly offset by new and acquired store sales. Retail operating loss in the third quarter was $6 million, including $3 million in store closure charges and costs.
In addition to the newly acquired Unified business, credit for Q3 wholesale performance was driven by sales to new customers and increased sales to new stores operated by existing customers, partly offset by stores no longer operated by customers, and lower military sales.
"In addition to these recent acquisitions, we continue to achieve strong underlying growth in our wholesale business," Gross said. "With the influx of significant new business in certain distribution centers, we experienced a larger-than-anticipated increase in expenses, but we're encouraged by the work we are doing to address those costs and believe they are manageable going forward. We remain committed to investing in our wholesale business to drive future growth.”
Supervalu currently expects net earnings from continuing operations to be in the range of $(20) million to $2 million, which includes a noncash charge of $35 million to $45 million anticipated to be made in Q4 to reduce the carrying value of Supervalu's net deferred tax asset in accordance with the newly enacted tax reform legislation.
Supervalu Inc. serves customers across the United States through a network of 3,324 stores composed of 3,111 wholesale primary stores operated by customers serviced by the company’s food distribution business and 213 traditional retail grocery stores operated under five retail banners in six geographic regions.