What's Wrong With SUPERVALU?

SUPERVALU has been right up there with Green Mountain Coffee Roasters as one of the most humbling crashes of 2012. The company continued to fall hard throughout the year, and now is down more than 60% in the past three months alone. A multitude of factors are at play, but the biggest headlines are a suspension of their dividend, perpetually weaker same-store sales, and pension liabilities. SUPERVALU's fall stands as a lesson to shareholders that not all dividends are created equal. In this grocer's case, it had a great yield at almost 8%, but it was built on shaky ground and was more the product of a deteriorating shareprice than anything else.

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Austin Smith owns shares of SUPERVALU. The Motley Fool owns shares of Costco Wholesale, SUPERVALU, and Whole Foods Market. Motley Fool newsletter services recommend Costco Wholesale and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On July 23, 2012, at 5:20 PM, Msherer wrote:

    It is so sad because for the last 4 years people have been posting that SVU was going in the wrong direction, but the bone heads running the company new better......Did They? To see dividend cut just weeks after ceo was givien a raise????? This is Larry Johnston CEO ofALbertson's before Supervalu bought them all over again almost to the letter...look for huge CEO golden parachute.

  • Report this Comment On July 25, 2012, at 1:08 PM, Msherer wrote:

    Here are some ideas to make supervalu work. New ad formats for its banner stores, Ad items the customers have to buy, loss leaders that customers cannot just pass up. Instead of the last years of must by 5 or 10 give customers chance to buy one or two at supper savings (it is ok to set a limit of 2 as we want the customer in the store). Once you have them in store need some supper price displays in their face not in the AD. They want to push in house brands, you put some on display at killer prices (with limits) and make customers try your products. Most important is they have to NOT try and recoup any margins with higher priced every day needed items. This can happen in all departments Meat, Produce, Non-Foods, bakery, Deli. They have to have deals customers just have to come in for...then you get volume, follow up every week and soon customers will start coming buying more and more as they start trusting the fact they get super sale items and fair prices on everything else they need.

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