Supervalu Swings To Profit In Q2 On Cost Reduction

(RTTNews) - Grocery retailer Supervalu, Inc. (SVU) Thursday reported a profit for the second quarter compared to a loss last year, benefited by the company's cost cutting initiatives and lower depreciation expense. Net sales marginally increased and profit margins improved from the prior year. The shares are up about 5 percent in pre-market trading.

Sam Duncan, president and chief executive officer of the company said, "Similar to what we outlined in the first quarter, we remain focused on delivering steady improvements in our business each and every quarter. While our end goal won't be achieved overnight..."

For the second quarter, the company posted net earnings of $40 million or $0.15 per share, compared to a net loss of $111 million or $0.52 per share in the year-ago quarter.

Net loss from continuing operations in the prior year was $0.26 per share. The prior year result included $36 million in after-tax charges primarily related to the write-off of unamortized loan costs, asset impairments, and store closures.

Excluding a legal settlement charge and a gain on sale of property, adjusted earnings for the recent quarter was $0.13 per share. For the second quarter of the prior fiscal, the company had posted adjusted net loss from continuing operations of $0.09 per share.

On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

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 sales for the quarter marginally increased to $3.95 billion from $3.94 billion reported last year. Nine analysts had consensus revenue estimate of $3.88 billion for the quarter.

The company said net sales for all periods now include fees earned under the transition services agreements or TSA with Albertsons LLC and New Albertsons, Inc.

Supervalu said it experienced continued reduction in rate of sales decline in Retail Food and Save-A-Lot. Retail Food net sales declined 1.1 percent, and Save-A-Lot net sales edged down 0.1 percent.

Gross profit margin was 14.6 percent, compared to 13.4 percent last year.

Selling and administrative expenses declined to $465 million from $541 million a year earlier, mainly due to benefits from the company's cost cutting initiatives and lower depreciation expense.

SVU closed Wednesday's regular trading at $8.40 on the NYSE. In the pre-market activity, the shares are up 4.88 percent.