) posted adjusted earnings per share of 13 cents for the second
quarter of fiscal 2014 ended Sep 7, 2013, beating the Zacks
Consensus Estimate of 11 cents per share by 18.2%. The results
were much better than the loss of 9 cents suffered by the company
in the comparable prior-year quarter.
Adjusted earnings exclude an after-tax income of $9 million
and an after tax charge of $3 million related to legal
The better-than-expected results were due to higher gross
earnings following effective cost-reduction
Revenues and Margins
Supervalu's total sales rose 0.2% year over year to $4.0
billion as positive identical store sales at the corporate
Save-a-Lot network was offset by negative identical store sales
in the network retail food segment. Sales beat the Zacks
Consensus Estimate of $3.8 billion.
Gross margin inflated 120 basis points (bps) to 14.6% in the
quarter on the back of higher fees earned under the transition
services agreements (TSA) compared with last year.
During the second quarter, SVU received $62 million under the
TSA compared to $10 million last year, due to higher number of
stores and distribution centers covered under the agreements.
Net sales at
declined 1.1% to $1.07 billion in the second quarter of fiscal
2014 from $1.09 billion in the prior-year quarter. Results were
affected by a same-store sales decline of 0.9% due to aggressive
pricing by its peers and incremental price investments by
Supervalu. Operating margin in the segment shrank 40 bps to 0.7%
in the reported quarter due to incremental investment in pricing
and store remodeling.
Net sales at
were almost flat at $972 million compared with $973 million in
the year-ago quarter. The decline was due to negative identical
store sales in the Save-A-Lot network of 0.3%. However, identical
store sales for corporate stores within the Save-A-Lot network
were positive 4.6%.. Save-A-Lot's operating margin shrank 20 bps
to 3.3% of sales as cost reduction initiatives were offset by
incremental price investments.
Net sales at the
declined 1.6% year over year to $1.84 billion in the quarter from
$1.87 billion a year ago. Lower sales to existing customers hurt
sales in this segment. The Independent business' operating
margin, however, inflated 110 bps to 3.9% during the quarter
backed by higher gross margins and lower operating cost.
Other Financial Update
Cash and cash equivalents of Supervalu were $81.0 million as
of Sep 7, 2013, versus $76.0 million as of Jun 15, 2013.
Long-term debt and capital lease obligations remained flat at
$2.9 billion as of Sep 7, 2013, compared with the previous
Other Stocks to Consider
Supervalu currently carries a Zacks Rank # 3 (Hold). Other
stocks in the retail sector worth considering include
Green Mountain Coffee Roasters Inc.
Tree House Foods Inc.
), all carrying a Zacks Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
SUPERVALU INC (SVU): Free Stock Analysis
TREEHOUSE FOODS (THS): Free Stock Analysis
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