Supervalu: A Comeback You Don't Want To Miss

| About: SUPERVALU Inc. (SVU)

Supervalu Inc. (NYSE:SVU) is an innovator in the grocery marketplace, offering an extensive variety of food products in communities countrywide via merchants. These products range from hard discount to conventional and advanced grocery models. The company reaches thousands of people with its products, solutions and services. This is via retailers that are operated, registered, franchised, and associated.

Supervalu is one of biggest and oldest retail grocery companies operating in the United States. The company serves independent retail customers.


Supervalu Inc. operates its business through two segments, independent business and retail food.

Retail Food

Businesses of retail food are carried out by a total of 2,434 conventional and hard-discount retail foodstuff stores. These stores are available all over the United States.

The company runs 1,102 conventional retail food items stores. These retail food items stores vary in size about 40,000 to 60,000 square feet, functioning under the Acme, Albertsons, Cub Foods, Farm Fresh, Hornbacher's, Jewel-Osco, Lucky, Shaw's, and Shop 'n Save names. The corporation's traditional food shops offer grocery and numerous extra products.

Independent Business

Supervalu mainly provides wholesale supply of items to independent retailers. This segment covers 47 states. The company assists as major grocery provider to about 1,900 shops of independent retail clients. In addition to the corporation's personal shops, Supervalu is also a supplementary grocery provider to around 760 merchants. The businesses at wholesale prices distribution clients involve individual and several grocery retail stores, local and nationwide chains.

Financial First Quarter Results

Supervalu recently announced results for the first quarter of fiscal 2013. The company documented net sales of $10.6 billion, compared to net product sales of $11.1 billion in the year-ago quarter. Internet income is $41 million, or $0.19 per diluted share. Internet income was $74 million or $0.35 for each diluted share, within the first quarter of fiscal 2012. According to my studies, decrease in internet sales reflects the disposition of the majority of fuel facilities. I also want to point out a decrease within identical shop sales is due to intense price levels.

Retail Food

Retail food working revenue was $99 million or 1.5 % of net sales, which was $150 million or 2.0% of net sales in the year-ago quarter. The alteration in retail store food working revenue as a percentage of net product sales was mainly the result of sales deleveraging.

Independent Business

Independent business working revenue in the 1st quarter was $65 million, or 2.6% of net product sales. Net product sales of the previous calendar year were $77 million, or 3.1% of net product sales.

Augmenting Price Investment strategies

This is a remarkably good step taken by the corporation. Supervalu lately introduced its fair selling price and also rethinking its marketing strategies. The company now prefers its marketing at its Jewel-Osco banner, backed by an extensive mass media marketing campaign. Supervalu is taking extra initiatives this year. Half of the corporation's stores are estimated to be priced correctly to opponents. Outstanding stores transferred to a fair price plus marketing and advertising in financial 2014.

Accelerating Concentration on Expenditure Cutbacks

The company is taking some serious steps to increase profit. Supervalu also declared that it is focusing on management and functional cost cutbacks to gain an extra $250 million. Supervalu is implementing an intensive focus on performance and productiveness throughout all features. As far as I see, Supervalu is counting on the plan to come out leaner and more productive. The cost savings initiatives are incremental to the $75 million in expense cutbacks in this year. The company has surpassed its expenditure saving objectives for three years in a row.


It looks fantastic that Supervalu has a fair price, as well as a successful promotion strategy. This change is suitable for business. I mostly agree with Goldman Sachs (NYSE:GS) that Supervalu makes a profitable choice. It is gratifying to see that Supervalu moves even stronger to lower costs and react to rival actions. The corporation is working hard to meet all of the demands for great quality from lower prices. In my opinion, the company should plan to do that while remaining profitable.

Supervalu should pay ongoing lower debts to reduce liabilities. It would be beneficial if it invests in major cities to keep and enhance all shops, as well as associated assets. Apparently, the company will be going after deeper and more financial savings endeavors. It won't be surprising if the business keeps on making investments in its stores. 40 remodels and the inclusion of 40 Save-A-Lot locations will increase profit in fiscal year 2013. Investing in this stock will not be disappointing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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