When discount grocer SUPERVALU (NYSE:SVU) reports earnings before market-open tomorrow, it will be a slimmer, smaller operation than in quarters past -- and a less profitable one, at least in the short term.

In September, the company announced plans to sell 20 of its Pittsburgh-area stores, with the buyers being, for the most part, existing independent operators of the Shop 'n Save locations to be sold. The company will record non-cash losses on the sales, reducing SUPERVALU's fiscal 2006 earnings projections to a range between $1.88 and $1.98 per diluted share. That projection, which was included in the firm's October earnings release, represents a slight pullback from the $1.90 to $2.04 range it set when making the sale announcement just a month before. It accounts for a total of $0.41 per share in non-cash charges for start-up costs, losses associated with Hurricane Katrina, and losses on the sale of the 20 Pittsburgh stores. In all, these charges will wipe out the bulk of the $0.47 per share -- also non-cash -- profit that SUPERVALU recorded last year from the sale of its interest in WinCo Foods.

Of course, none of these non-cash charges plays into analysts' expectations for the firm's performance on tomorrow's earnings report, or for the fiscal year as a whole. Analysts expect the firm to record $2.25 per share "pro forma" for the year, and $0.50 per share "pro forma" for fiscal Q3 2006. That quarterly pro forma number, by the way, would fall 12% below the firm's performance of one year ago.

Also not included in analyst estimates, I suspect, are the costs the firm probably incurred in performing due diligence in preparation for a joint bid (with Cerberus Capital and Kimco Realty (NYSE:KIM)) to acquire the more profitable bits of ailing grocer Albertson's (NYSE:ABS). SUPERVALU reported having called off that effort late last month. Pharmacy CVS Corp. (NYSE:CVS) is said to remain interested, however.

Thus, it seems that SUPERVALU will be ending this year as a slimmer operation after the Pittsburgh sales. For shareholders, I suspect that's a good thing. Although the company boasts lower gross margins than competitors such as Kroger (NYSE:KR) and Safeway (NYSE:SWY), it's worth noting that SUPERVALU has improved its gross margins in every year since 1999. Whatever impact the non-cash charges have on SUPERVALU's net profit in fiscal 2006, therefore, I'd suggest you keep your eye on the gross margins instead. As long as they continue their upward march, this company has to be considered a success.

For a contrasting Take on SUPERVALU, read:

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Fool contributor Rich Smith has no position in either of the companies mentioned in this article.