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Supervalu’s 4Q Sales ‘Softer’ Than Forecasted

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Supervalu’s new president and CEO, Mark Gross, said Tuesday that, although the company’s fourth quarter sales were “softer than we had forecast, I am optimistic about our future prospects … We have a lot of positives to build on as we move forward.”

Fourth quarter consolidated net sales were $3.95 billion compared to $4.07 billion last year when excluding the additional week in fiscal 2015, which accounted for $313 million in net sales last year. Total net sales within the Wholesale segment decreased 4.8 percent excluding the additional week in fiscal 2015. Save-A-Lot network identical store sales were negative 2.2 percent. Identical store sales for corporate stores within the Save-A-Lot network were negative 1.3 percent. Retail segment identical store sales were negative 3.9 percent.

Mark Gross
Mark Gross

Gross profit for the fourth quarter was $590 million, or 15.0 percent of net sales. Last year’s fourth quarter gross profit was $663 million, or 15.1 percent of net sales, which included the additional week in fiscal 2015 that contributed approximately $49 million to fourth quarter fiscal 2015 gross profit. The decrease in gross profit as a percent of sales compared to last year was primarily driven by higher inventory shrink and employee costs, the Minnesota-based company says.

Fourth quarter Wholesale net sales were $1.74 billion, compared to $1.83 billion last year when excluding $143 million in net sales from the additional week in fiscal 2015. The net sales decrease of 4.8 percent when excluding the additional week in fiscal 2015 is primarily due to lost accounts and lower sales to existing customers, partially offset by increased sales to new customers and new stores operated by existing customers, Supervalu says.

Wholesale operating earnings in the fourth quarter were $50 million, or 2.9 percent of net sales. Last year’s Wholesale operating earnings in the fourth quarter were $63 million, or 3.2 percent of net sales. The additional week in fiscal 2015 contributed approximately $7 million to Wholesale operating earnings. The decrease in Wholesale operating earnings as a percent of sales was driven by higher employee costs.

Fourth quarter Save-A-Lot net sales were $1.06 billion, compared to $1.06 billion last year when excluding $79 million in net sales from the additional week in fiscal 2015. The net sales decrease of 0.8 percent when excluding the additional week in fiscal 2015 reflects identical store sales across the Save-A-Lot network of negative 2.2 percent and the impact of closed stores, partially offset by increased sales from new corporate and licensed stores, according to the company.

Save-A-Lot operating earnings in the fourth quarter were $14 million, or 1.4 percent of net sales, and included $9 million of store closure and impairment charges and $2 million of severance costs. When adjusted for these items, Save-A-Lot’s operating earnings were $25 million, or 2.4 percent of sales. Last year’s Save-A-Lot operating earnings in the fourth quarter were $47 million, or 4.1 percent of net sales, and included $3 million of store closure and impairment charges. When adjusted for this item, last year’s Save-A-Lot operating earnings were $50 million, or 4.4 percent of net sales. The additional week in fiscal 2015 contributed approximately $4 million to Save-A-Lot operating earnings. The decrease in Save-A-Lot operating earnings as a percent of sales was driven by higher employee and store occupancy costs, and higher inventory shrink.

Fourth quarter Retail net sales were $1.11 billion, compared to $1.14 billion last year when excluding $87 million in net sales from the additional week in fiscal 2015. The net sales decrease of 2.6 percent when excluding the additional week in fiscal 2015 reflects negative identical store sales of 3.9 percent, partially offset by sales from new stores.

Retail operating earnings in the fourth quarter were $30 million, or 2.7 percent of net sales. Last year’s Retail operating earnings in the fourth quarter were $44 million, or 3.6 percent of net sales. The additional week in fiscal 2015 contributed approximately$7 million to Retail operating earnings. The decrease in Retail operating earnings as a percent of sales was driven by lower base margins, higher inventory shrink, and higher employee costs.

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