Supervalu first-quarter profit falls as sales decline
Grocery chain Supervalu Inc. said Tuesday that its fiscal first-quarter profit dropped 30 percent as sales and profit margins softened as it cut prices and spent more on promotions.
The grocery chain's adjusted results managed to top analysts' estimates, but the company cut its full-year adjusted profit guidance on the likelihood that consumer spending would continue to be squeezed.
The operator of stores such as Cub Foods, Albertsons, Save-A-Lot and Farm Fresh earned $113 million, or 53 cents per share, for the period ended June 20. That's down from $162 million, or 76 cents per share, a year earlier.
Excluding store closing costs, profit was 55 cents per share. This was above the 53 cents-per-share that analysts polled by Thomson Reuters predicted. Analysts' estimates generally exclude one-time items.
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Supervalu has seen its sales decline as it loses business to discounters, wholesalers and other stores. The company warned in June that tough competition for cash-strapped shoppers' spending would take a toll on its earnings.
"Our first-quarter results reflected the continuing difficult economic environment as well as investments we are making in price and higher levels of promotional spending," CEO Craig Herkert said in a statement.
Sales slipped 5 percent to $12.72 billion from $13.35 billion, missing Wall Street's prediction of $12.81 billion.
But management said in the fourth quarter that it plans to change its brand lineup, improve its pricing and increase promotions to deliver better results for shoppers and investors.
Retail food sales dipped 4.3 percent to $9.9 billion on store closings and a same-store sales decline of 3.2 percent.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
Supply-chain services sales fell 6.2 percent to $2.8 billion, mostly due to the transition of Target Corp. to self-distribution.
The Eden Prairie, Minn.-based company lowered its full-year adjusted earnings outlook to $2.01 to $2.21 per share. Its previous forecast was for an adjusted profit of $2.50 to $2.65 per share.
Analysts expect net income of $2.15 per share for the year.