US: Supervalu Swings To Profit In Q4, Sales Drop
Supervalu has managed to reverse its fourth-quarter loss in 2009 with a solid profit this year, but suffered sharp drops in sales due to store closures.
For the quarter ending 27 February, the company reported a profit of $97m, compared with a loss of $201m last year (affected by $498m in goodwill and impairment charges). However, sales were down 15% year-on-year to $7.2bn, while same-store sales were down 6.8%. The company noted that sales were affected by one less week of trading in the quarter this year.
For the full year, the company reported a net profit of $393m, while sales were down 9% to $40.6bn, and same-store sales declined by 5.1%. For the current year (ending February 2011), the group expects sales to further decline to $39bn, while same-store sales are expected to be down by 2%.
CEO Craig Herkert said the group expects to turn in better results, but only gradually, following the completion of his new management team. He said, “This is a long-term process for us. There is no one quarter fix.”
He also pointed to the initial success of its “Simplify Her Experience” (SHE) initiative, which involves rationalizing SKUs and improving signage and adjacencies. However, he admitted that the group still faces tough competition from rivals, and is having to work hard to attract cash-conscious consumers.
The company said it will continue to focus on lower prices but is launching a number of new stores, store remodels and eventually, a new effort to improve the shopper's experience in the stores.
Supervalu added that it will cut the size of its board of directors from 15 to 12 members, and has selected a Wayne Sales to the new position of non-executive Chairman. Sales has been a director at the company since 2006, and was a former Vice Chairman of the Canadian Tire Corporation.
NamNews - Wednesday 21st April 2010