Dive Brief:
- Supervalu Inc. reported fourth quarter net sales of $2.91 billion compared to $2.89 billion last year, a slight increase of 0.6%, according to its recent earnings report. The company also posted a profit of $0.13 EPS, exceeding Wall Street expectations of $0.9 EPS.
- The company’s gross profit for Q4 was a reported $435 million, or 15% of net sales. This is also slightly up from a gross profit of $431 million in the year-ago period, or 14.9% of net sales.
- Supervalu reduced its total outstanding debt and pension obligations $1.04 billion and $248 million, respectively, in fiscal 2017.
Dive Insight:
It was a busy quarter for Supervalu. In Q4, the grocery retailer completed the sale of its Save-A-Lot business and announced it would merge with Unified Grocers in a $375 million deal, though the latter move isn't reflected in the company's latest earnings report.
The Unified Grocers transaction is expected to close this summer. Together, the grocery wholesalers had combined sales of nearly $16 billion in 2016. The deal will give Supervalu expanded growth opportunities across several areas including the western U.S. It will also provide opportunities for innovation in the specialty, gourmet and natural/organic food space. The grocer will spend about $60 million on transition and integration costs during the first two years after the deal closes.
The company’s wholesale net sales were $1.79 billion, compared to $1.74 billion last year, which the company credits to new customers and stores. Wholesale operating earnings came in at $64 million, which, compared to last year’s figures of $50 million, is strong. Supervalu said operating earnings were driven by higher gross margins and vendor allowances.
Last quarter, Supervalu execs said the company expected to increase its fiscal year 2018 revenue by $1 billion, or 10%. These numbers show they are heading in the right direction.