Q3 2012 Earnings Call
January 11, 2012 10:00 am ET
Sherry M. Smith - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Craig R. Herkert - Chief Executive Officer, President, Director and Member of Executive Committee
Kenneth B. Levy - Vice President of Investor Relations
Jonathan P. Feeney - Janney Montgomery Scott LLC, Research Division
John Heinbockel - Guggenheim Securities, LLC, Research Division
Kelly A. Bania - BofA Merrill Lynch, Research Division
Mark Wiltamuth - Morgan Stanley, Research Division
Shane Higgins - Deutsche Bank AG, Research Division
Karen F. Short - BMO Capital Markets U.S.
Mike Otway - Jefferies & Company, Inc., Research Division
Deborah L. Weinswig - Citigroup Inc, Research Division
Meredith Adler - Barclays Capital, Research Division
Ajay Jain - Cantor Fitzgerald & Co., Research Division
Previous Statements by SVU
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Kenneth B. Levy
Thank you, Ashley. I want to welcome everyone to SUPERVALU's Third Quarter 2012 Earnings Conference Call. Joining me on today's call are Craig Herkert, Chief Executive Officer and President; and Sherry Smith, Executive Vice President and Chief Financial Officer.
We have prepared some supplemental information to accompany our prepared remarks, which is available on SUPERVALU's Investor Relations website under the Presentations and Webcasts section. Following prepared remarks, we will open up the call for your questions. So that we can accommodate as many people as possible, I would ask that you limit yourself to one question with one follow-up.
The information presented and discussed today includes forward-looking statements, which are made under the Safe Harbor provisions 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. A replay of today's call as well as the supplemental information will be available on our corporate website at www.supervalu.com.
With that, I will now turn the call over to Craig Herkert.
Craig R. Herkert
Thank you, Ken, and good morning, everyone. As you saw in this morning's press release, SUPERVALU reported earnings per share of $0.24, excluding impairment charges on identical store sales of negative 2.9%. We remain on track with our business transformation plan and with our earnings guidance for fiscal 2012.
It's been 3 quarters since we first introduced our 8 Plays to Win, which defines our organizational priorities and our vision to becoming America's Neighborhood Grocer. To date, we've made good progress on implementing new tools that better utilize data and improve decision making, while generating funding that has been provided for meaningful investment in retail price across our stores. We've lowered costs across the enterprise and continue to see opportunities to do so. We have invested in our asset base, adding 29 Save-A-Lot stores this year, 19 of which are located in food deserts and completing 49 traditional remodels.
Our independent business remains strong with some of the best operators in the industry. We've also stepped up our sustainability efforts, which is both good for the environment and for our bottom line. The transformation work we are doing is fundamentally repositioning SUPERVALU so that this company will better serve its customers while providing solid returns for our shareholders and bond owners.
At the foundation of our strategy is hyperlocal retailing. We've equipped our store directors with new tools and insights about their trade areas to better meet the needs of the communities they serve. And as we have rolled out our hyperlocal strategy across the store network, we've also changed long-held practices at the enterprise level to simplify operations and better support our stores.
We're committed to narrowing the relative price gap that exists in our markets through a focus on fair price plus promotion. By design, we've moved away from short-term promotions that trigger cherry picking, and implemented more pricing and marketing programs designed to build long-term loyalty and offer a fair price to our customers.
We've continued to lower prices in certain categories on known value items and in select markets throughout the year. In the third quarter, we launched Fresh Produce, Fresh Prices. This initiative lowered the everyday price on around 200 key produce items in all but one market, and that one will launch tomorrow.
We remain disciplined in our strategy of pre-funding investments through promotional efficiency and operational improvement. This methodical process matches investments with funding, resulting in an improvement to prices, which is increasingly noticeable to our customers and sustainable for our business. In fact, our internal price surveys, as well as those conducted by many of the analysts that follow us, confirm we are making progress. These efforts continue to bring better value to all our customers with improved pricing, enhanced private brand offerings and more targeted weekly promotions. I'll provide more detail on the progress we're making on our 8 Plays to Win, but first, let me turn the call over to Sherry for some color on our third quarter financial performance and our financial position.
Sherry M. Smith
Thank you, Craig, and good morning. Before I discuss our operating results for the quarter, I want to provide some background on the goodwill and impairment charge we recorded. This non-cash charge was related to our market capitalization, which has remained low with the sustained weakness in our share price. Accounting rules require that we reconcile our book value to our market capitalization in assessing recoverable value of goodwill and other intangible assets.