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What happened
Shares of grocer Supervalu Inc. (SVU) fell 14% in October, according to data provided by S&P Global Market Intelligence, after the company announced an asset sale and fiscal second quarter earnings.
So what
Supervalu announced the sale of Save-A-Lot for $1.365 billion in cash to Onex Corporation. The money will be used to repay at least $750 million in debt on a term loan.
Quarterly results didn't leave much for investors to be excited about either. Sales from continuing operations fell 4.8% to $3.87 billion, and net income was just $31 million, or $0.11 per share.
Now what
Everything from wholesale to retail sales was down in the quarter as Supervalu's business continues to deteriorate. And that deterioration puts a lot of focus on the $2.2 billion in debt on the balance sheet at the end of last quarter, leaving a lot of risk even after a debt reduction from the Save-A-Lot sale. I just don't see any reason to be bullish on the stock today considering the debt and a decline in operations as a whole.
