Grocery wholesale and retail outlet SUPERVALU (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.