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SUPERVALU INC. (SVU)
F4Q10 (Qtr End 2/27/10) Earnings Call Transcript
April 20, 2010 10:00 am ET
Ken Levy – VP, IR
Craig Herkert – President and CEO
Pam Knous – EVP and CFO
Meredith Adler – Barclays Capital
Mark Wiltamuth – Morgan Stanley
Ed Kelly – Credit Suisse
Radina Russell – JP Morgan
Susan Andersen [ph] – Deby [ph]
Karen Short – BMO Capital
Previous Statements by SVU
» SUPERVALU Inc. F3Q10 (Qtr End 12/05/09) Earnings Call Transcript
» SUPERVALU Inc. F2Q10 (Qtr End 09/12/09) Earnings Call Transcript
» SUPERVALU, Inc. F1Q10 (Qtr End 07/28/09) Earnings Call Transcript
Good morning, and thank you for joining us to discuss SUPERVALU's fourth quarter and year-end results for fiscal 2010. With me on today's call are Craig Herkert, SUPERVALU's Chief Executive Officer and President; and Pam Knous, Executive Vice President and Chief Financial Officer. Following prepared remarks, we will open up the call for a question-and-answer session.
As you know, the information presented and discussed today includes forward-looking statements, which are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. The risks and uncertainties related to such statements are detailed in our most recent 10-K filing. Today's call will be available for replay on our Web site at supervalu.com. I will also be available after today's call for additional questions.
With that, I will now turn the call over to Craig Herkert.
Thanks, Ken, and good morning. As you read in this morning's release, SUPERVALU reported earnings per share of $0.62 in the fourth quarter before one-time items, and $2.03 for the full year. All in all, I'm pleased with our fourth quarter results, and would say that we've accomplished a lot, not the least of which was delivering on the earnings and beating the debt reduction guidance provided at the end of the first quarter shortly after I joined the company.
I want to start the call by emphasizing that we're making steady progress, streamlining operations, taking expenses out of the business, and meeting our financial plans despite a challenging economic and competitive environment. Consumer spending and buying habits are changing due to the prolonged economic recovery. Today, the majority of my prepared remarks will focus on the strategic actions that SUPERVALU is taking in fiscal '11 to become a more effective retailer, more intently focused on meeting the needs of our customers, and positioned for a long term financial success.
I'd like to briefly recap the significant accomplishments of the fourth quarter as strategically it was an important time for us. First, we've completely redesigned the role of our store leadership to fully reflect that our store directors, more than anyone else, have the ability to positively influence the shopping experience. In the past, too much of the store director's time was spent on administrative task.
Second, we've also refined and aligned our marketing and merchandising organizations. The lion's share of our better merchant and marketing teams representing nearly 75% of our sales no matter where they reside physically now report to our centralized leadership team here in Minneapolis.
Third, we optimized 10 major center store categories across all of our traditional retail stores. In doing so, we moved with pace, completing these resets in record time. On average, we've removed about 20% of the FTUs from each category. We also exited 26 general merchandise categories that were not core to our customer focus, items such as fragrances, automotive accessories, and everyday electronics. These efforts contributed to lower year-end inventory levels.
Fourth, in private brands, we corrected pricing and imposed new shelf placement disciplines company-wide.
Fifth, we've opened 22 new Save-A-Lot stores during the quarter, and will accelerate this growth rate with 100 new locations planned for fiscal '11.
Sixth, during the quarter, we sold 15 Shaw stores in Connecticut, most recently, announced our exit from the Cincinnati market. A great family operated grocer, Remke Markets, who has been in the food business for over a century, agreed to purchase seven of our bigg's locations. As part of this deal, SUPERVALU will continue to supply the bigg's stores that Remke operates, and will supply Remke's existing seven stores. All told, this is a great example of SUPERVALU leveraging its relationship and expertise to execute as America's neighborhood grocer.
Seventh, we paid down $545 million in debt during the quarter, exceeding our debt reduction goal by nearly $150 million for the year.
Eighth, we launched the replacement of our credit facility, which was successfully completed earlier this month. This milestone should remove any questions about our financial flexibility.
Lastly, but of critical importance, I have filled out my management team. I now have the right people in the right jobs, each with a clear understanding of their roles and responsibilities. On our last earnings call, I shared with you the addition of Steve Jungmann, EVP of merchandising. Steve's drive and leadership have already been felt throughout the organization. And we are reshaping the way that we work with our suppliers as well as with our vendors. He's been working in partnership with our vendors to bring value to customers and improve return of investment for all parties.
Julie Dexter Berg, our chief marketing officer has been on board for four weeks. She is a true marketer, and has a long career forging strong customer connections, improving brand help, and driving improvements in operations performance. During the course of the year, I look forward to sharing with you Julie's impact and the accomplishments of her team.