Supervalu earnings rise in first quarter

(AP) - Supervalu Inc., the nation's No. 3 supermarket chain, said Tuesday its first-quarter earnings jumped because of its purchase of the Albertsons grocery chain a year ago.

And with a potential strike in its Southern California stores averted, it raised the bottom end of its guidance for the year.

Supervalu said it earned $148 million, or 69 cents per share, up from $87 million, or 57 cents per share a year ago. Revenue rose to $13.29 billion from $5.78 billion a year ago.

Analysts surveyed by Thomson Financial were expecting earnings of 69 cents per share on revenue of $13.04 billion.

The results included costs of 8 cents per share from the June 2, 2006, acquisition.

For the full year, Supervalu said it expects to earn $2.93 to $3.03 before acquisition costs of 20 cents per share, raising the bottom end a nickel.

Its revenue guidance remained unchanged at $44 billion. Analysts were expecting $2.79 per share including 16 cents to 20 cents in acquisition costs.

Supervalu's outlook for the full year became a lot firmer on Monday after grocery workers in Southern California approved a new contract that should avoid a repeat of a costly 141-day lockout at Albertsons stores in 2004.

The new contract eliminates a two-tier system for pay and benefits and gives experienced workers raises of $1.65 an hour over the life of the new contract.

The Eden Prairie-based grocer ranks third among the nation's biggest supermarket chains after Kroger Co. and Safeway Inc. Buying Albertsons more than doubled Supervalu's revenue and gave it a national footprint for the first time.

"We are now beginning to execute our business plans that will maximize the full potential of our transformed company" including cost savings from combining the two operations, Chairman and Chief Executive Jeff Noddle said in a statement.

For the full year, Supervalu said it expects same-store sales to rise 1 percent to 2 percent. It said it would add 25 to 30 standard-sized stores and 60 to 80 smaller ones, and remodel 100 to 110 stores. It currently has 2,450 grocery stores.

Supervalu's retail food and drug stores reported $449 million in operating earnings on $10.42 billion in revenue, up from earnings of $128 million on sales of $5.78 billion a year ago.

Earnings dropped 12 percent to $67 million in its distribution operation, from $76 million a year ago. That came even as revenue rose slightly to $2.87 billion, up from $2.85 billion a year ago.

(Copyright 2007 by The Associated Press. All Rights Reserved.)