Supervalu Third Quarter Results Top Estimates

(RTTNews) - Grocery retailer Supervalu, Inc. (SVU) reported Wednesday a profit for the third quarter that more than doubled from last year, despite lower operating margins, reflecting sales growth across all three business segments and gains from discontinued operations.

Adjusted earnings per share from continuing operations and quarterly net sales also topped analysts' expectations.

"We passed an important milestone this quarter delivering positive sales increases in all three of our business segments for the first time in many years. I'm very encouraged to see our Independent Business segment post higher sales compared to last year's third quarter, and I remain pleased with the continued progress we are making in our retail stores," President and CEO Sam Duncan said.

The Eden Prairie, Minnesota-based company reported net earnings of $79 million or $0.30 per share for the third quarter, higher than $31 million or $0.12 per share in the prior-year quarter.

Net earnings from continuing operations for the latest quarter was $12 million or $0.04 per share, and adjusted earnings from continuing operations was $49 million or $0.18 per share.

Recent quarter's results included a $36 million after-tax pension settlement charge and $1 million in after-tax debt refinancing and net information technology intrusion costs.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter grew 4.8 percent to $4.20 billion from $4.01 billion in the same quarter last year, and topped eight Wall Street analysts' consensus estimate of $4.09 billion.

The growth in sales was attributable to a 6.9 percent rise in identical store sales in the save-a-lot network and a 2.3 percent increase in the retail food segment. Identical store sales for corporately operated stores within the Save-A-Lot network grew 8.5 percent.

Independent business net sales grew 2.4 percent to $1.96 billion, primarily due to increased sales to existing customers and new accounts partly offset by lost accounts, including one New Albertson's, Inc. banner.

Net sales for retail food ID grew 2.3 percent to $1.12 billion, and save-a-lot network ID net sales totaled $1.08 billion, up 6.9 percent from last year.

"Save-A-Lot had another good quarter from a sales perspective while also delivering a higher operating margin compared to the second quarter," Duncan stated.

Fees earned under the transition services agreements in the third quarter were $43 million, down from $48 million last year.

Operating margin for the quarter contracted 130 basis points to 1.3 percent from last year as gross margin declined 10 basis points and selling and administrative expenses, as a percentage of total sales, increased 130 basis points.

"Overall, the third quarter provided many positives for us to build on during the final quarter of our fiscal year," Duncan added.

In Wednesday's regular trading session, SVU is currently trading at $9.35, up $0.16 or 1.72% on a volume of 0.20 million shares. In the past 52-week period, the stock has been trading in a range of $5.38 to $9.95.