Supervalu Second Quarter Results Top Estimates

(RTTNews) - Grocery retailer Supervalu, Inc. (SVU) reported Thursday a profit for the second quarter that declined from last year, despite sales growth, reflecting lower operating margins.

However, adjusted earnings per share from continuing operations and quarterly net sales topped analysts' expectations.

"Midway through fiscal 2015, I am encouraged with the progress we have made across the business. The investments we have made at Save-A-Lot continue to drive sales and our Retail Food stores recorded their third consecutive quarter of positive identical store sales," President and CEO Sam Duncan said in a statement.

The Eden Prairie, Minnesota-based company reported net earnings of $31 million or $0.11 per share for the second quarter, lower than $40 million or $0.15 per share in the prior-year quarter.

Net earnings from continuing operations for the latest quarter was $32 million or $0.11 per share, and adjusted earnings from continuing operations was $34 million or $0.13 per share.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter grew 1.8 percent to $4.02 billion from $3.95 billion in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $3.95 billion.

The growth in sales was attributable to a 6.5 percent rise in identical store sales in the save-a-lot network and a 0.4 percent increase in the retail food segment. Identical store sales for corporately operated stores within the Save-A-Lot network grew 8.2 percent.

Net sales for retail food grew to $1.10 billion from $1.07 billion, and save-a-lot net sales totaled $1.05 billion, up 8.0 percent from last year.

Fees earned under the transition services agreements in the second quarter were $44 million, down from $62 million last year.

Meanwhile, independent business net sales declined 1.1 percent to $1.82 billion, primarily due to lost accounts, including one New Albertson's, Inc. banner. The Independent Business consortium completed the Rainbow transactions.

"The addition of the Rainbow stores this past quarter is a positive for our Independent Business and we are encouraged by the early results," Duncan added.

Operating margin for the quarter contracted 50 basis points to 2.3 percent from last year as gross margin declined 40 basis points and selling and administrative expenses, as a percentage of total sales, increased 10 basis points.

SVU closed Wednesday's regular trading session at $8.55, up $0.15 on a volume of 5.75 million shares. In the past 52-week period, the stock has been trading in a range of $5.38 to $9.78.