Leading grocery chain
) has reshuffled its leadership roles following the sale of a
number of its supermarkets to Cerberus Capital.
Under the leadership of former
) Chief Executive Officer Sam Duncan, who became Supervalu's CEO
in Feb 2013 the company made many changes to its management team.
After the sellout closes by Mar 18, 2013, Tim Lowe, the present
executive vice president of merchandising and Michael Moore, the
present chief marketing officer, will be replaced by Mark Van
Buskirk, from Supervalu's rival grocery chain
The Kroger Company
). He will take up the responsibility of executive vice president
of merchandising and marketing in the company.
As a part of broad-based strategic alternatives, Supervalu will
sell Albertson's, Jewel-Osco, Acme, Shaw's and Star Market
chains, all of which combined come to about 877 stores. These go
to private equity firm Cerberus Capital Management LP, for $3.3
Management commented that it wants to slim down in order to focus
more on Save-A-Lot discount stores, as well as its smaller
regional chains Cub, Farm Fresh, Shoppers, Shop 'n Save and
The company has also changed the management team of St.
Louis-based supermarkets Shop 'N Save and Save-A-Lot. Ritchie
Casteel replaces Santiago Roces as president and CEO of
Save-A-Lot. Eric Hymas replaces Marlene Gebhard as president of
Shop 'N Save.
We believe that the executive management turnaround could prove
beneficial to Supervalu's fundamentals as all the new appointees
have extensive retail and grocery experience. Also, the idea of
increasing focus on the Save-A-Lot discount stores is encouraging
as it happens to be the highest revenue earner for Supervalu and
has the potential to remain the key growth driver.
The financial performance of Save-A-Lot was disappointing in
the past few quarters and we expect a full-proof turnaround
strategy from the new leaders to make the Save-A-Lot program
Supervalu missed estimates in the third quarter of fiscal 2013
and also posted lower earnings from the year-ago quarter.
Moreover, the company reported negative identical store sales
successively for the past four years. The trend has continued in
the first half of fiscal 2013.
Now, in order to combat four successive years of negative
identical store sales and re-position the company for growth,
Supervalu is geared for expansion of its private brand portfolio
and to step up cost-reduction initiatives.
These are expected to reduce administrative and operational
expense by an additional $250 million by fiscal 2014. The
anticipated shutdown of meat plants like
Sanderson Farms Inc.
) due to the scheduled sequester by the U.S. government may
disrupt supply to the company, which may in turn affect sales.
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Currently, Supervalu carries a Zacks Rank #3 (Hold).