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Save-A-Lot Posts Positive Results For 3Q, Supervalu Sales Down

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Supervalu on Thursday reported its third quarter 2014 results, and the company said its Save-A-Lot banner sales and earnings are up from the same time a year ago.

The discount banner’s net sales were $991 million compared to $966 million last year, an increase of 2.6 percent, reflecting the impact from network identical store sales of positive 1.7 percent. Identical store sales for corporate stores within the Save-A-Lot network were positive 5.4 percent.

Save-A-Lot operating earnings in the third quarter were $40 million, or 4.1 percent of net sales. Last year’s Save-A-Lot operating earnings in the third quarter were $27 million, or 2.7 percent of net sales, and included $10 million in pre-tax charges primarily related to store closure charges. When adjusted for these charges, Save-A-Lot operating earnings in last year’s third quarter were $37 million, or 3.8 percent of net sales. The increase in Save-A-Lot adjusted operating earnings was primarily attributable to the benefits of cost reduction initiatives.

As a whole, Supervalu reported third quarter net sales of $4.01 billion compared to $4.05 billion last year, a decrease of 1.0 percent. Identical store sales in the Retail Food segment were negative 1.9 percent. Total sales within the Independent Business segment decreased 3.7 percent.

Net earnings from continuing operations for the third quarter of fiscal 2014 were $32 million, or $0.12 per diluted share, and included $3 million in after-tax net charges and costs comprised of a multi-employer pension plan withdrawal charge, asset impairment, contract breakage and other costs, offset in part by a gain from the sale of a property and the reduction of previously accrued severance costs. When adjusted for these items, third quarter fiscal 2014 net earnings from continuing operations were $35 million, or $0.13 per diluted share. Net loss from continuing operations for last year’s third quarter was $15 million, or $0.07 per diluted share, which included $1 million in after-tax net charges primarily related to store closure and severance charges offset in part by a gain related to a cash settlement from credit card companies. When adjusted for these items, last year’s third quarter net loss from continuing operations was $14 million, or $0.07 per diluted share. Net loss from discontinued operations in the third quarter of fiscal 2014 was $1 million.

“Although we are less than a year removed from the sale of five of our retail banners, Supervalu has made positive strides in all three of our business segments to better position the company for financial growth and improved shareholder value,” said Supervalu President and CEO Sam Duncan. “Although we still have work to do to improve our sales trajectory, I am pleased with the accomplishments we made within our operations this quarter and look forward to completing my first fiscal year leading this company.”

Independent Business

Third quarter Independent Business net sales were $1.91 billion compared to $1.99 billion last year, a decrease of 3.7 percent, primarily due to lower sales to existing customers, including military, and two larger lost customers partly offset by net new business, according to Eden Prairie, Minn.-based Supervalu.

Independent Business operating earnings in the third quarter were $53 million, or 2.8 percent of net sales, and included $4 million of net pre-tax charges related to a multi-employer pension plan withdrawal charge, asset impairment and other net charges, offset in part by a gain from the sale of a property. When adjusted for these net charges, Independent Business operating earnings in the third quarter were $57 million, or 3.0 percent of net sales. Last year’s Independent Business operating earnings in the third quarter were $51 million, or 2.6 percent of net sales, and included $1 million in pre-tax severance charges. When adjusted for this charge, Independent Business operating earnings in last year’s third quarter were $52 million, or 2.7 percent of net sales. The increase in Independent Business adjusted operating earnings was primarily attributable to a higher level of professional services income and strong expense management.

Retail Food

Third quarter Retail Food net sales were $1.06 billion compared to $1.09 billion last year, a decline of 2.6 percent, primarily reflecting identical store sales of negative 1.9 percent.

Retail Food operating earnings in the third quarter were $24 million, or 2.2 percent of net sales, and included $1 million in pre-tax income related to a reduction of previously accrued severance costs. When adjusted for this item, Retail Food operating earnings in the third quarter were $23 million, or 2.2 percent of net sales. Last year’s Retail Food operating earnings were $17 million, or 1.5 percent of net sales, and included a $10 million pre-tax gain related to a cash settlement from credit card companies partly offset by a $1 million pre-tax asset impairment charge. When adjusted for these items, last year’s Retail Food operating earnings in the third quarter were $8 million, or 0.7 percent of net sales. The increase in Retail Food adjusted operating earnings was primarily driven by the benefit of cost reduction initiatives, including lower depreciation expense.

 

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