Bloomberg News

Supervalu to Close 60 Stores Amid Three-Year Sales Slump

September 06, 2012

Supervalu to Close 60 Stores Amid Three-Year Sales Slump

Supervalu Inc., owner of the Albertsons and Save-A-Lot grocery-store chains, rose 3.1 percent to $2.35 at 4:15 p.m. in New York. Photographer: Peter Newcomb/Bloomberg

Supervalu Inc. (SVU:US), owner of the Albertsons and Save-A-Lot grocery-store chains, plans to close 60 stores as it copes with slumping sales.

The closings will result in a pretax charge of as much as $90 million in its fiscal 2013, the Eden Prairie, Minnesota- based company said yesterday in a statement. The largest cuts will come from the Albertsons chain, which will shut 27 locations, while Save-A-Lot will lose 22 stores.

The third-largest U.S. grocery chain has been eliminating jobs and cutting prices on food to keep pace with dollar stores and big-box retailers such as Wal-Mart Stores Inc. (WMT:US) Supervalu, which has posted three straight years of revenue declines, said in July it was conducting a strategic review of alternatives and suspending its dividend.

“It’s accretive and that’s good,” Scott Mushkin, a New York-based analyst at Jefferies & Co., said in an interview. “But it does seem like if they were selling assets they wouldn’t be doing this.”

The closures “hint at the idea that an imminent sale is not at hand,” Mushkin said.

Supervalu shares have tumbled 72 percent this year.

The company, which had revenue of $36.1 billion in its fiscal 2012, said in June that it planned to eliminate as many as 2,500 jobs at Albertsons to help reduce costs. Chief Executive Officer Wayne Sales, who took the helm after Craig Herkert was ousted, has said that Supervalu will focus on cutting its expenses.

Business Critical

“We are doing many things that are not business critical,” he wrote in an e-mail to the company’s 130,000 employees on July 30 after being named CEO. “Tough decisions will be made to change this reality.”

The closings will generate $35 million in cash within 12 months and as much as $90 million in the next three years, Supervalu said. The company, which said it will use the cash to pay down debt, also expects a pretax gain of about $10 million from the sale of assets in its fiscal second quarter.

“We are not providing the number of team members impacted” Mike Siemienas, a Supervalu spokesman, said in an e- mail, citing collective bargaining agreements at stores.

Supervalu has about 2,400 retail food stores, including its licensed Save-A-Lot locations, in the U.S., according to a regulatory filing.

Kroger Co. (KR:US), based in Cincinnati, is the largest U.S. grocer, and Pleasanton, California-based Safeway Inc. (SWY:US) is the second-biggest.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • SVU
    (SUPERVALU Inc)
    • $9.47 USD
    • -0.09
    • -0.95%
  • WMT
    (Wal-Mart Stores Inc)
    • $75.84 USD
    • 0.29
    • 0.38%
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