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Supervalu Sees Rise In Wholesale Segment As Retail Sales Continue To Falter

Supervalu

Last updated on June 13th, 2024 at 11:51 am

Supervalu’s third quarter wholesale sales increased slightly vs. a year ago, but its retail segment continued to struggle.

Total net sales within the wholesale segment increased 0.2 percent, to $1.91 billion from $1.90 billion a year ago. New business is outpacing lost business, the company said.

Retail identical store sales were negative 5.7 percent, dropping from $1.10 billion in the same quarter last year to $1.06 billion, a decrease of 3.4 percent. The company said the decrease reflects identical store sales of negative 5.7 percent and closed stores, partially offset by sales from acquired and new stores.

“It is a significant accomplishment that we increased wholesale sales compared to last year given the sales lost at the end of fiscal 2016,” said Supervalu President and CEO Mark Gross. “Unfortunately, in our retail segment we have not been able to overcome persistent deflation, competitive impacts and other factors. It takes time to change customers’ shopping habits, but our team is dedicated to improving our results.”

Overall third quarter net sales were $3.00 billion vs. $3.05 billion last year, a decrease of $42 million or 1.4 percent.

Since the third quarter ended, Supervalu reduced its debt with revenues from the $1.4 billion all-cash sale of Save-A-Lot to Onex Corp. in December.

“Early in the fourth quarter we used the majority of the proceeds from the sale of Save-A-Lot to reduce our outstanding debt by approximately $1.1 billion,” said COO and CFO Bruce Besanko.

Gross said the debt reduction will help move the company forward.

“The successful sale of Save-A-Lot early in the fourth quarter provides Supervalu with additional flexibility to operate and grow our business,” Gross said.

Besanko said the company also reduced costs with cuts to its pension plan obligations “through a successful lump-sum buyout of certain plan participants that resulted in the pension settlement charge this quarter. In addition, we made a $25 million cash contribution to the pension plan.”

Gross profit for the third quarter was $407 million, or 13.6 percent of net sales. Last year’s third quarter gross profit was $436 million, or 14.3 percent of net sales. The gross profit rate decrease compared to last year is primarily due to lower transition services agreements (TSA) fees and higher employee costs. Fees earned under TSAs in the third quarter were $37 million vs. $46 million last year.

Minneapolis-based Supervalu serves customers across the U.S. through a network of 2,067 stores, including 1,850 stores operated by wholesale customers serviced primarily by the company’s food distribution business, 195 traditional retail grocery stores operated under five retail banners and 22 stores under the Shop ‘N Save name in Maryland, Pennsylvania, Virginia, and West Virginia. It employs approximately 30,000 people.

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The Shelby Report delivers complete grocery news and supermarket insights nationwide through the distribution of five monthly regional print and digital editions. Serving the retail food trade since 1967, The Shelby Report is “Region Wise. Nationwide.”

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