Supervalu Makes Q3 Strides, Boosts Save-A-Lot Investment

For the third quarter fiscal 2015, Supervalu Inc. posted net earnings of $79 million, or 30 cents per diluted share, versus $31 million, or 12 cents per diluted share, in the year-prior period. Earnings from continuing operations were $12 million, or four cents per diluted share, versus $33 million, or 12 cents per diluted share, in last year’s third quarter.

Results for the fiscal 2015 quarter included a $36 million after-tax pension settlement charge and $1 million in after-tax debt refinancing as well as net information technology intrusion costs. When adjusted for the one-time items, third quarter fiscal 2015 net earnings from continuing operations were $49 million, or 18 cents per diluted share, Supervalu related. Results for the fiscal 2014 third quarter included $3 million in after-tax net charge and costs consisting of a multiemployer pension plan withdrawal charge, asset impairment, contract breakage and other costs, offset in part by a gain from the sale of a property and the reduction of previously accrued severance costs, so earnings from continuing operations were $36 million, or 13 cents per diluted share, Supervalu noted.

A consensus analyst estimate from Zacks called for adjusted earnings per share of 14 cents.

Net sales were $4.2 billion versus $4.01 billion in the year-ago third quarter, Supervalu reported. Identical store sales for corporate stores in the discount grocery Save-A-Lot network were up 8.5%. Identical store sales in the retail food segment, including the company’s more traditional supermarket operations, were up 2.3%, Supervalu maintained.

As for its role as a food distributor, Supervalu Independent Business segment total sales increased 2.4%, the company pointed out. Fees earned under the Transition Services Agreements in the third quarter came in at $43 million versus $48 million last year.

Save-A-Lot operating earnings were $34 million versus $40 million in the year-earlier third quarter, with the decrease primarily due to higher advertising, employee and occupancy costs, Supervalu stated. Retail food operating earnings in the third quarter were $28 million versus $25 million in the year-prior period, which included $1 million of income related to a reduction in previously accrued severance costs, with the year-over-year gain primarily due to lower depreciation, occupancy, and employee-related costs, partly offset by incremental investments to lower prices to customers and a higher LIFO charge, according to Supervalu. Independent business operating earnings were $60 million versus $53 million, including a $4 million one-time charge in the year-ago period.

“We passed an important milestone this quarter, delivering positive sales increases in all three of our business segments for the first time in many years,” said Sam Duncan Supervalu president and CEO. “I’m very encouraged to see our independent business segment post higher sales compared to last year’s third quarter, and I remain pleased with the continued progress we are making in our retail stores. Save-A-Lot had another good quarter from a sales perspective while also delivering a higher operating margin compared to the second quarter. Overall, the third quarter provided many positives for us to build on during the final quarter of our fiscal year.”