Supervalu reports lower than expected third-quarter results
- Supervalu Inc. reported a third-quarter net loss of $26 million, with $11 million coming from continued operations.
Wholesale net sales increased 0.2%, up to $1.91 billion, but retail sales fell by 3.4%, at $1.06 billion.
In the earnings report, company President and CEO Mark Gross said that the successful sale of Save-A-Lot last month provides the retail, wholesale and distribution company with more flexibility — even though the retail segment has seen challenges.
The unexpected lower sales by Supervalu can best be attributed to many of the same challenges that are impacting all grocery retailers—online competitors, increases in foodservice and lower prices.
The company’s retail operating loss for 3Q was $14 million, or negative 1.3% of net sales. Analysts say that Supervalu is in a curious position as it is neither a low-price, no-frills option nor a specialty chain, so it hasn’t defined itself in the market.
The company, which operates stores in the Cub Foods, Farm Fresh, Hornbacher's, Shop 'N Save and Shoppers chains, as well as operating in wholesale and distribution to more than 1,800 independent stores nationwide, sold its chain Save-A-Lot to an affiliate of Onex Corp. for $1.365 billion in cash in December.
Transitioning the company to concentrate more on wholesale could help Supervalu achieve better margins going forward, especially since it is a place where the company saw more revenue. It's history in the wholesale space and insider knowledge of the grocery retail sector give Supervalu a solid foothold in the segment.
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