Supervalu Earns Record Profit

The company reported net sales of $4.7 billion for the third fiscal quarter ended Dec. 3, compared to $4.6 billion in last year's third quarter. Its profit of 53 cents per diluted share compared with 46 cents in the third quarter last year, when it earned $64.9 million.

The company hopes to continue its profitable ways in the long run via strategies like the launch of a new natural and organic retail format called Sunflower Markets and investment in supply chain technology, according to Jeff Noddle, Supervalu chairman and CEO. Noddle and other Supervalu executives outlined those plans in a discussion of the quarterly results with financial analysts on a conference call Tuesday.

Noddle noted that Supervalu, which announced its plans for the new Sunflower Markets in October, is scheduled to open the first Sunflower Market in Indianapolis today. The Sunflower chain is "designed to capitalize on the rapidly growing market for natural and organic foods in the US" and to make such products available at more affordable prices, Noddle said.

Noddle noted that third quarter results included retail net sales of $2.5 billion, a 1.9% increase compared to last year's third quarter. The results primarily reflected new store openings and were partially offset by the impact of higher store closings, primarily at the company's Save-A-Lot chain.

Supervalu's expansion plans for the year include the addition of approximately 55 to 60 extreme value stores and approximately 12 new regional banner stores, along with approximately 25 regional banner remodelings. It also expects to close approximately 65 stores, primarily Save-A-Lot sites, as well as the company's previously announced plans to sell its 20 Pittsburgh stores.

Supervalu's fiscal 2006 outlook includes the expectations that its comparable store sales will be approximately flat for the remainder of the year. It expects to sell Zero Zone, a refrigeration case and system manufacturer, to shed non-core assets and focus on the company's food retail and supply chain service businesses.

Noddle added that Supervalu "will continue to transform itself" with programs like the natural and organic retail format, Sunflower Market, as well as the system-wide rollout of its Nature's Best private label and its W. Newell & Co produce business. Another of its strategies is to "customize our stores to address consumer demographics," the Supervalu CEO said in the conference call.

For example, the company has converted one of its stores to a Hispanic format and has named it El Primero Mercado. The conversion enables Supervalu to compete more effectively against other local markets that focus on Hispanic customers, Noddle said.

Supervalu's operates 1,546 stores in 40 states, including 1,277 extreme value stores, which include 287 corporate-owned Save-A-Lot stores, 852 licensed Save-A-Lot stores and 138 Deals stores. Its 269 regional banner stores operate under the names Cub Foods, Shop 'n Save, Shoppers Food & Pharmacy, Farm Fresh, Scott's Foods and Hornbacher's.