Following Supervalu’s sale of its Save-A-Lot division, the supermarket retailer posted a soft second quarter, with flat earnings and a decline in sales.
For the second quarter of fiscal 2017, Supervalu posted net earnings from continuing operations of $30 million, or 11 cents per diluted share, versus $31 million, or 11 cents per diluted share, in the year-earlier period.
Third quarter results included a net $2 million after-tax gain comprised of a fee received from a supply agreement termination, partially offset by store closure charges and costs as well as costs related to the potential sale of Save-A-Lot. Adjusted for these items, net earnings from continuing operations were $28 million, or 10 cents per diluted share.
Net earnings from continuing operations for last year’s second quarter included $6 million in after-tax costs related to the potential separation of Save-A-Lot and severance costs. Adjusted for these items, net earnings from continuing operations for last year’s quarter were $37 million, or 13 cents per diluted share.
Retail identical store sales were down 5.9%. At Save-A-Lot, identical store sales were down 5.2%. Comps for corporate stores within the Save-A-Lot network were down 5%.
Second quarter net sales were $3.87 billion versus $4.06 billion in the year earlier period. Total net sales within the retail segment were $1.03 billion down from $1.09 billion in the year earlier quarter; in the Save-A-Lot segment sales were down to $1.06 billion from $1.09 billion; and wholesale segment sales were down to $1.73 billion from $1.83 billion in the 2015 quarter.
“As we expected, the transformation of our business continues to take time, but I am optimistic about our ability to grow our wholesale business by adding new customers, securing long-term supply agreements with existing customers and expanding overall product sales to all customers,” said Mark Gross, Supervalu president and CEO. “We expect wholesale sales in the second half of this year to be higher than last year as we add new customers, grow our base business and cycle select customer losses from last year.”
Supervalu has entered into a definitive agreement with an affiliate of private equity firm Onex Corp. to sell its Save-A-Lot discount grocery business for $1.37 billion in cash.