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Supervalu’s 4Q Earnings Show Positive Trends

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Last updated on April 25th, 2014 at 11:09 am

Supervalu Inc. reported Wednesday that its fourth quarter fiscal 2014 net sales were $3.95 billion, an increase of 1.4 percent vs. the same period a year ago. Net earnings totaled $26 million, or $0.10 per diluted share.

Identical store sales in the Save-A-Lot network were up 2.1 percent, while ID store sales for corporate stores within the Save-A-Lot network increased 3.5 percent.

Identical store sales in the retail food segment were relatively flat, growing by 0.2 percent to $1.09 billion from virtually the same total a year ago.

Total sales within the independent business segment fell 0.6 percent in the fourth quarter to $1.82 billion vs. $1.83 billion last year, primarily due to the continued impact of losing two large customers and lower military sales partially offset by net new business, the Minneapolis-based company said.

“Fiscal 2014 was an important transition year for Supervalu as we stabilized the organization and set the foundation for our future,” said President and CEO Sam Duncan. “I am pleased with the direction of our business segments and look forward to the new fiscal year where we can focus our attention on driving sales growth across the organization.”

Net earnings from continuing operations for the fourth quarter of fiscal 2014 were $40 million, or $0.15 per diluted share, and included $8 million in after-tax net costs and charges primarily for employee severance and debt financing activities.

Net loss from continuing operations for last year’s fourth quarter was $174 million, or $0.82 per diluted share, and included $149 million in after-tax costs and charges primarily for non-cash asset impairments and employee severance.

Net loss from discontinued operations in the fourth quarter of fiscal 2014 was $14 million.

Gross profit for the fourth quarter was $590 million vs. $557 million a year ago. Supervalu attributes the increase to incremental fees earned under transition services agreements (TSA) and the benefits of lower infrastructure costs partly offset by incremental investments to lower prices to customers.

Fourth quarter fees earned under the TSA were $46 million compared to $9 million last year, reflecting a higher number of stores and distribution centers covered under the agreements. (Find more information about the TSAs here.)

Supervalu has annual sales of approximately $17 billion; a network of 3,339 stores composed of 1,819 independent stores serviced primarily by the company’s food distribution business, 1,330 Save-A-Lot stores, of which 948 are operated by licensee owners, and 190 traditional retail grocery stores. The company employs about 35,000 people.

Supervalu appoints Terry Savage, Mathew Pendo to board

In other Supervalu news, Frank A. (Terry) Savage and Mathew M. Pendo have been elected to Supervalu’s board of directors. The appointments became effective Thursday. Savage and Pendo were both appointed to the board as designees of Symphony Investors LLC, a Cerberus Capital Management L.P.-led investor consortium, under the terms of the agreement entered into with Symphony Investors and Cerberus in connection with Supervalu’s sale of five banners to an affiliate of Symphony Investors. Symphony Investors owns approximately 20.9 percent of Supervalu’s outstanding common stock. Under the terms of the agreement, Symphony Investors had the right to designate replacements for Mark Neporent and Lenard Tessler, who resigned March 6.

Savage currently is a senior advisor to Lazard Ltd. and the former vice chairman of U.S. Investment Banking at Lazard. Savage was the co-head of Lazard’s Restructuring Group and also served on Lazard’s Deputy Chairman Committee. Before joining Lazard, he had served as the co-head of the Restructuring Practice at BT Alex. Brown Inc. and prior to that as the head of the Restructuring Group at UBS AG. Savage holds a degree from the University of Pennsylvania’s Wharton School of Business.

Pendo currently is a managing director at Sandler O’Neill Partners, a boutique investment banking firm focused on the financial services industry. Prior to joining Sandler O’Neill, Pendo served as the chief investment officer for the Troubled Asset Relief Program (TARP) at the U.S. Department of the Treasury from November 2010-March 2013. Pendo previously worked as managing director of investment banking at Barclay Capital, where he served as co-head of the Global Industrials Group and the U.S. Investment Banking Group. Pendo currently sits on the board of directors of Ally Financial Inc., a bank holding company focused on the auto finance and online banking industries. Pendo holds a bachelor of arts degree in economics from Princeton University and received a Distinguished Service Award from the U.S. Department of Treasury for his work overseeing the Treasury’s $200 billion TARP investment activities.

Commenting on the new appointments, Gerald Storch, Supervalu’s non-executive chairman, said, “Terry and Mathew each bring tremendous business and financial experience to the Supervalu board and we are excited to have them join.”

Supervalu’s board determined that Savage and Pendo are each independent directors under the New York Stock Exchange listing standards. The board now has 11 members, nine of whom are independent directors under the New York Stock Exchange listing standards.

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