SuperValu Inc. (SVU)

SVU 
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SUPERVALU (SVU)

Q2 2013 Earnings Call

October 18, 2012 10:00 am ET

Executives

Steve Bloomquist

Wayne C. Sales - Executive Chairman, Chief Executive Officer, President and Chairman of Corporate Governance and Nominating Committee

Sherry M. Smith - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Meredith Adler - Barclays Capital, Research Division

Deborah L. Weinswig - Citigroup Inc, Research Division

Ajay Jain - Cantor Fitzgerald & Co., Research Division

Stephen Shin - Morgan Stanley, Research Division

John Heinbockel - Guggenheim Securities, LLC, Research Division

Shane Higgins - Deutsche Bank AG, Research Division

Edward J. Kelly - Crédit Suisse AG, Research Division

Stephen W. Grambling - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Good morning. My name is Ashley and I will be your conference operator today. At this time, I would like to welcome everyone to the SUPERVALU Second Quarter Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Steve Bloomquist, Director of Investor Relations. Sir, you may begin your conference.

Steve Bloomquist

Thank you, Ashley, and good morning, everyone. I want to welcome everyone to SUPERVALU's Second Quarter Fiscal 2013 Earnings Conference Call. Joining me today are Wayne Sales, President, Chief Executive Officer and Chairman; and Sherry Smith, Executive Vice President and Chief Financial Officer. Following prepared remarks, we will open up the call for your questions. [Operator Instructions]

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 will be available on our corporate website at www.supervalu.com.

With that, I will turn the call over to Wayne.

Wayne C. Sales

Thanks, Steve, and good morning. I want to thank everyone for joining us today. This is month 3 in my new role as CEO and President of SUPERVALU. And today is my first opportunity to formally address each of you, our shareholders and analysts. I met some of you already and look forward to meeting the rest of you soon.

I suspect many of you have already read my background, but let me just share a few highlights that I think are important for you to know about me. A good portion of my career was spent with Canadian Tire, where I arrived just ahead of the expansion of several U.S. retailers into Canada, and during that time, when the company was fairly successful. However, I knew that we needed to change. Our change would be made for us. So I began preparing us to not only withstand the heightened competition, but to successfully grow and prosper. When I took over as CEO of Canadian Tire in 2000, we built the company by focusing on the things that made us special, by leveraging the products, people and operational excellence that truly differentiated us and our business from others, while, at the same time, ensuring that we have the right cost structure to support the business.

As I look at SUPERVALU, I see many similar challenges, but I also see some of the same opportunities. And a lot of that opportunity begins with leadership, which I consider the most important element of a successful company. By leadership, I'm not just referring to the CEO. Leadership, it is about every person in this company doing the right thing every day to take care of our customers. As we move forward, you may see comparisons drawn to what we did at Canadian Tire, but you will also see new ideas brought to life. I want to make it clear that I am excited to be here in this new position. This is not an interim role. I'm here for the long haul, and I am committed to helping this company create customer and shareholder value to the greatest extent possible.

Now let's talk about where we are headed. When I assumed my position, I outlined 4 strategic imperatives that I thought was critical to positioning the company for success: driving profitable sales in SUPERVALU retail, grow Save-A-Lot, build on our legacy of serving independent retailers and taking cost out of the business. These are not necessarily new, but in outlining them for the team, we brought greater clarity to what is the most critical efforts right now for improving the business.

As we begin to define the strategies underlying each of these imperatives, we will focus on first, what are the elements where we will be competitive? These are areas where we will not disappoint and lose a customer. And secondly, what are the things that we will do to differentiate ourselves? What are the things that will attract and retain customers? And what are the things that we will be famous for, that we can exploit or things we can develop that makes our stores a destination?

By looking at the business in this manner, we are refocusing the organization on the basic fundamentals of retailing and clearly defining points of differentiation. As we chart our path forward, we will move quickly, decisively and intelligently to improve our performance. I remain committed to doing the things necessary to return SUPERVALU to profitable growth and to move with speed and an absolute sense of urgency. And I look forward to updating you on our progress in the upcoming quarters.

Now let's move to the quarter, where this morning, we announced sales of $8 billion and adjusted earnings of $0.00 per share. Operating earnings were down in each of our business segments, and our press release provided some insights into the drivers behind these declines. These results and, quite frankly, our performance over last quarters, are not acceptable. I've spent the last 90 days visiting stores, meeting team members, talking with customers and suppliers and listening to our independent retailers and licensees. And I can tell you that I am optimistic about our company and the work we do for our customers. We have a good foundation here. We're moving with a new sense of urgency and with a team that is absolutely committed to improving our business. But I'm also a realist, and I'll be the first to admit that we still have much work to do.

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