Supervalu Weighs Options To Bolster Retail Sales

Supervalu continues to weigh its real estate and store portfolio options after a fourth quarter where earnings fell short of Wall Street expectations and retail revenues fell on a slight identical store sales gain.

For the fourth quarter ended February 24, Supervalu posted company net income from continuing operations of $25 million, or 64 cents per diluted share, versus $24 million, or 64 cents per diluted share, in the year-prior period. Adjusted earnings per share from continuing operations were 61 cents versus 80 cents in the year-earlier period, which fell short of a MarketBeat-published analyst average estimate of 79 cents.

Identical store sales increased 0.1% in the quarter year over year. Net sales were, $3.59 billion versus $2.53 billion in the year-previous period. Retail net sales in the quarter were $690 million versus $694 million in the year-before period as idents couldn’t offset the loss of revenue due to store closings.

For the full fiscal year, Supervalu posted net income from continuing operations of $49 million, or $1.25 per diluted share, versus $35 million, or 81 cents per diluted share, in the year prior. Adjusted earnings per share from continuing operations were $2.06 versus $1.57, in the year earlier. Net sales were $14.16 billion versus $10.91 billion in the year previous.

The company noted that it has entered into definitive agreements to sell eight of its distribution centers to a buyer for an aggregate purchase price, excluding closing costs and taxes, of approximately $483 million, with net proceeds estimated to be $445 million. The sale also includes a leaseback condition for seven of the properties, and Supervalu expects deal completion to occur in May and, for one property, October.

The company also said it is pursuing the sale of Shop ‘n Save, based in St. Louis, and Shop ‘n Save East, with stores in West Virginia, Maryland, Pennsylvania and Virginia.

“We finished fiscal 2018 strong with results in-line with our expectations after having made significant progress throughout the year with our ongoing wholesale business transformation,” said Mark Gross, Supervalu president and CEO. “We’re pleased with our efforts to date to create a stronger company with more focused operations through the purchase of Unified Grocers and AG Florida. Already in the first two months of fiscal 2019, we’ve capitalized on our business momentum by taking several decisive, strategic actions that further our transformation. These include exiting our Farm Fresh banner, the announcement that we’re pursuing the sale of our Shop ‘n Save and Shop ‘n Save East retail operations, and the monetization of approximately $483 million in owned real estate. With a growing wholesale business and more stable group of retail stores, we believe Supervalu is well positioned for success.”