) is set to report its 2013-fourth quarter results on Apr 24
before the market opens. In the last quarter, the company posted
a 50% negative surprise. Let's see how things are shaping up for
Factors for Decline This Past Quarter
Supervalu was adversely affected by the slow economic recovery
and low disposable income of the U.S. consumers, which resulted
in cautious spending in the quarter. Disappointing same-store
sales led sales to slip by 5% to $7.9 billion from the year-ago
level. Earnings were lower than expected due to higher
advertising spending, investment in the fair price plus promotion
strategy and changes in the business segment mix.
On Mar 18, 2013, as a part of broad-based strategic
alternatives, Supervalu sold Albertson's, Jewel-Osco, Acme,
Shaw's and Star Market chains, having a total of 877 stores in
combination, to equity firm Cerberus Capital Management LP, for
Management commented that it wanted to streamline its
operations in order to focus on Save-A-Lot discount stores, as
well as its smaller regional chains - Cub, Farm Fresh, Shoppers,
Shop 'n Save and Hornbacher's.
Supervalu is also trying to combat four years of negative
identical store sales and re-position the company for growth, by
expanding its private brand portfolio and step up cost-reduction
initiatives. As a part of the effort, the company has reduced its
headcount by 1,100 from nearly all of the company's offices and
High promotional spending and aggressive pricing policy of the
competitors are crippling margins.
There has been a very limited estimate revision in the past 90
days. As a result, the Zacks Consensus Estimate remained at 19
cents for the fourth quarter of fiscal 2013 and 42 cents for the
The company has reported negative surprises for three of the
last four quarters with a trailing average surprise of negative
The sellout of supermarket chains, however, is expected to
help the company in focusing more on Save-A-Lot discount stores
that may help the company boost sales in the coming quarters.
Cost reduction initiatives are expected to reduce administrative
and operational expense by an additional $250 million by fiscal
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