SuperValu profits, share price, take a hit

(Bloomberg) -- The share price of SuperValu Inc., the owner of Save-A-Lot and Cub Foods grocery stores, fell the most in almost four months after lowering its fiscal 2011 profit forecast on poor promotional sales and lost food distribution business.

Full-year profit, excluding some items such as store closure costs, will drop to as much as $1.35 a share, compared with an earlier estimate of as much as $1.60, the company said in a statement today.

"We invested heavily in promotional activities that proved to be less than effective," Chief Executive Officer Craig Herkert said in the statement.

SuperValu's sales have dropped for seven straight quarters as it struggles to keep pace with other discount retailers such as Wal-Mart Stores Inc. and Target Corp., which are offering more fresh food, especially in urban areas. The grocer suffered as Target increasingly used its own food warehouses for distribution, the statement said.

SuperValu shares tumbled $1, or 12 percent, to $7.59 at 4:01 p.m. in New York Stock Exchange composite trading. The stock lost 24 percent in 2010.

The company reported a net loss of $202 million. Profit, excluding a variety of one-time costs in the period ended Dec. 4, fell 54 percent to $50 million, or 24 cents a share, from $109 million, or 51 cents, a year earlier, the company said. The average estimate compiled by Bloomberg was 32 cents.

Sales were $8.67 billion in the third quarter, down from $9.22 billion in the same period a year ago.

SuperValu hasn't been able to find a buyer for its Shaw's supermarkets, the Wall Street Journal reported last month, citing people familiar with the matter. SuperValu owns 194 Shaw's and Star markets on the East Coast, according to its website.

For fiscal 2011, analysts predicted $1.45 a share, the average of 16 estimates compiled by Bloomberg. SuperValu, based in Eden Prairie, earned $2.03 last year, excluding some items.