MINNEAPOLIS-Supervalu, parent company of retail chains Save-A-Lot, Bigg’s, Cub Foods, Farm Fresh, Hornbacher’s, Scott’s, Shop ‘n Save, and Shoppers Food & Pharmacy, reported a 1% Q1 increase in net sales and a 61% loss in net earnings.

Addressing the financial decline, Jeff Noddle, chairman and chief executive officer, reminded investors during a Wednesday earnings call that last year’s first quarter results included a net after-tax gain on the sale of the company’s minority interest in WinCo Foods Inc. of $68.3 million, or 47 cents diluted earnings per share.

The grocery giant reported in its first quarter ended June 18 net sales of $6 billion compared to $5.9 billion last year and net earnings decrease of $91.2 million compared to $149.4 million versus the same period last year. Basic earnings for the quarter on per-share basis came in at 67 cents compared to $1.10, and diluted earnings per share were reported at 64 cents compared to $1.04.

In the retail food segment, first quarter retail net sales were $3.2 billion, an increase of 1.7% compared to last year’s first quarter. Comparable store sales growth for the quarter was negative 0.4%, including slightly negative comparable stores sales at company-operated Save-A-Lots, when compared to last year’s total retail comparable store sales growth of positive 1.8%.

Noddle said that with more than 20% of the company’s retail stores located in Florida, the promotional push following Winn-Dixie’s move into bankruptcy impacted the chain’s results. “This environment will likely continue as they work their way through bankruptcy,” he added.

Noddle also addressed industry rumors of Supervalu’s interest in shuttered Winn-Dixie stores. “Since we’re on the subject, I would like to set the record straight,” he said. “There has been speculation that we were bidding on some of these properties for corporate stores. We are actually aggregating a bid for our affiliated retail customers on some of the Winn-Dixie properties.” He added that the bids have been successful, and 18 Winn-Dixie properties will go to an independent retailer.

New store activity since last year’s first quarter, including licensed stores, resulted in 91 new store openings, opened and acquired, and 34 store closings for 57 net new store openings. During the past 12 months, new store openings included 81 extreme value stores, and 10 regional banner stores. Store closings for the last 12 months include 33 extreme value stores and one regional banner store. At the end of its first quarter, Save-A-Lot, including licensed stores, operated 1,287 stores, of which 483 stores were combination stores compared to 314 combination stores at the end of last year’s first quarter.

Moving into it second quarter, Noddle told investors that the company is planning for extensive remodeling in 200 to 300 its licensed stores, which may result in a slow-down of store openings. Each store will spend anywhere from $20 million to $30 million to “upgrade the Save-A-Lot fleet and bring in line the earlier generation Save-A-Lot stores to new store standards including equipment as well as branding image.”

In closing, Noddle reassured investors saying, “I am confident that we have a very strong portfolio of businesses that are capable of generating solid growth that continue and are continuing to improve on our return of invested capital.”

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