Smaller SUPERVALU Sees Profits Spike

Grocery wholesale and retail outlet SUPERVALU (NYSE: SVU  ) showed off its leaner side this morning after reporting its third-quarter earnings results.

For the quarter, the operator of Save-A-Lot, as well as a handful of other independent and food distribution businesses, delivered a 1% decline in total sales to $4.01 billion as adjusted profit came in at $35 million, or $0.13 per share, nearly doubling from the year-ago period, and gross margin expanded 120 basis points to 14.3%.

With regard to revenue, SUPERVALU reported a 1.7% increase in identical-store sales in its Save-A-Lot network (with corporate store identical-sales up 5.4%), while identical-store sales were negative in its retail food segment and independent business segment by 1.9% and 3.7%, respectively. The drag on its total sales was a direct result of the loss of two larger customers in its independent business segment which comprises close to half of SUPERVALU's revenue.

Margins expanded, though, as SUPERVALU, which sold off a number of its chains, including Albertson's and Jewel Osco, to Cerberus Capital Management last year, was able to focus more on improving operating efficiency at its remaining 3,358 stores. Selling and administrative expenses fell an adjusted $37 million (7.4%) from last year primarily because the overall company is smaller and there are fewer employees, while net interest expense on its remaining debt dipped by $11 million to $52 million due to lower average interest rates and a lower outstanding debt balance.

Fees earned by SUPERVALU under its transition service agreements also nearly quintupled to $48 million from $10 million last year, helping push profits higher. 

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  • Report this Comment On January 13, 2014, at 9:09 AM, raysfaninfla wrote:

    Yep, stocks rose, profits rose, costs were controlled...thats NO joke, I am a "fortunate" employee at Store level with the Save A Lot store line, and despite our stores sales being up double digits in most locations, we are operating with about 8-10% less labor weekly, and it seems to be tightened to the point of exhaustion. Keep tightening it guys, when some of us drop, you can replace us with fresh troops-its not about customer service or happy employees, its all about the bottom line at ALL costs!

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A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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