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DENVER-Minneapolis-based Supervalu is closings its nine retail stores and a warehouse facility in Denver, a move that could cost the area 1,000 jobs. Four of the nine retail stores and the distribution warehouse building will be sold to the Kroger Co., parent of King Soopers, the No. 1 grocer in the Denver area.

Supervalu says it continues discussions with other interested parties concerning the sale of the remaining retail stores. Financial terms of the transaction were not disclosed. The transaction with Kroger is expected to close by late November.

“The decision to sell our Denver-based operations is the result of a thoughtful and disciplined asset rationalization program that we began implementing more than two years ago,” says Jeff Noddle, Supervalu chairman and CEO. “Neither our retail nor our distribution operations in Denver generated sufficient volume or growth prospects to justify a continued capital investment. By deploying our capital to Supervalu’s best growth opportunities in both retail and distribution, we can build upon the successes in our core markets while improving our return on invested capital. Today’s announcement and other efforts we have implemented continue to add to improved return for our shareholders.”

Supervalu expects this transaction to generate net cash proceeds after closing costs and a loss on the sale of the assets.

The revised earnings per share guidance for fiscal 2004 is $2.04 to $2.10. The potential financial impact of the current strike in St. Louis is unknown at this time and not included in the fiscal 2004 earnings guidance. In fiscal 2005, the sale of the Denver-based operations will increase return on invested capital and modestly improve earnings per share on a slightly reduced revenue base. Supervalu will provide earnings guidance for fiscal 2005 in conjunction with the release of its third quarter results in December.

Supervalu’s retail store network, including licensees, consists of 1,451 stores in 40 states, including 1,186 Save-A-Lot extreme value stores – 802 licensed stores and 384 corporate owned stores, including 99 combination stores and 101 Deals stores; 265 regional banner stores including Cub Foods, Shop ‘n Save, Shoppers Food Warehouse, bigg’s, Farm Fresh, Scott’s Foods and Hornbacher’s stores. As of Sept. 6, Supervalu was primary supplier to approximately 2,600 stores, 29 Cub Foods franchised stores, and Supervalu’s own regional banner store network of 265 stores, while serving as secondary supplier to approximately 1,300 stores.

Supervalu has annual revenues approaching $20 billion.

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