Supervalu Q3 Profit Rises, Revenue Slides

(RTTNews) - Grocery retailer Supervalu, Inc. (SVU) Thursday reported higher profit for the third quarter, amid a slide in sales as well as cost of sales. Fees earned under the Transition Services Agreements increased as a result of growth in number of stores and distribution centers covered under the agreements.

Sam Duncan, CEO, said, ''Although we are less than a year removed from the sale of five of our retail banners, SUPERVALU has made positive strides in all three of our business segments to better position the company for financial growth and improved shareholder value."

Duncan added that the company still has work to do to improve its sales trajectory.

On January 10, 2013, the company announced it had reached a definitive agreement for the sale of five retail grocery banners: Albertsons, Acme, Jewel-Osco, Shaw's and Star Market. This transaction was completed on March 21, 2013.

Net earnings for the quarter increased to $31 million from $16 million in the previous year. Earnings per share rose to $0.12 from $0.08.

Net earnings from continuing operations was $32 million or $0.12 per share, compared to a loss of $15 million or $0.07 per share last year.

The latest results included $3 million in after-tax net charges and costs comprised of a multi-employer pension plan withdrawal charge, asset impairment, contract breakage, and other costs, offset in part by a gain from the sale of a property and the reduction of previously accrued severance costs.

The prior-year results included $1 million in after-tax net charges primarily related to store closure and severance charges offset in part by a gain related to a cash settlement from credit card companies.

Adjusted earnings from continuing operations was $0.13 per share, while it totaled a net loss of $0.07 per share last year.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.13 per share. Analysts' estimates typically exclude special items.

Net sales slid 1 percent to $4.012 billion from $4.051 billion in the prior year. Analysts estimated revenues of $4.05 billion for the quarter.

Fees earned under the Transition Services Agreements or TSA in the quarter climbed to $48 million from $10 million last year, resulting in higher gross profit. The increase was due to higher number of stores and distribution centers covered under the agreements and $4 million of the one-year transition fee earned under the TSA.

Independent Business net sales decreased 3.7 percent to $1.91 billion, primarily due to lower sales to existing customers, including military.

Save-A-Lot net sales rose 2.6 percent to $991 million, reflecting a positive 1.7 percent impact from network identical store sales. Identical store sales for corporate stores within the Save-A-Lot network were positive 5.4 percent.

Retail Food net sales fell 2.6 percent to $1.06 billion, primarily reflecting identical store sales of negative 1.9 percent.

Cost of sales fell to $3.443 billion from $3.521 billion.

The stock edged down 0.1 percent on Wednesday to close at $7.03.