Inside This Issue - News
Supervalu replaces chief exec
August 6th, 2012
MINNEAPOLIS – Craig Herkert has been succeeded as president and chief executive officer of Supervalu Inc. by Wayne Sales, who retains the post of chairman of the board.
Herkert’s exit follows closely on the heels of first quarter financial results that were much worse than expected. As a result, the company suspended its dividend, slashed capital expenditures and announced that it would explore strategic options, including the possible sale of part of the company.
Sales, 62, has been a member of the Supervalu board of directors since 2006 and nonexecutive chairman since 2010. His career in retailing includes a 15-year stint at Canadian Tire Corp., where he served as president and chief executive officer from 2000 to 2006.
While at Canadian Tire, Sales led the development and implementation of transformational strategies that repositioned the general merchandise and gasoline retailer in the face of Walmart’s entry into the Canadian market. The result was sales growth of nearly $3 billion and annual share price appreciation of almost 19%. He was named Distinguished Retailer of the Year in 2004 by the Retail Council of Canada.
Before joining Canadian Tire, Sales served in a number of senior leadership roles at Kmart Corp. in marketing, merchandising and store operations.
"In my new role I will work closely with our leadership team to improve our sales and earnings trajectory and generate long-term shareholder value, focusing relentlessly on identifying factors that will drive meaningful improvements in our strategy execution and overall performance," Sales said in a statement. "We will take significant costs out of the business and move with urgency in our retail food business to lower prices and create points of sustainable differentiation for our customers."
He added that the company will work more closely with its Save-A-Lot licensees and with independent retailers serviced by its grocery wholesale segment. Sales will also continue to lead the review of strategic options announced late last month.
In a letter to all Supervalu employees that was obtained by Dow Jones, Sales pointed to similarities between the current situation at Supervalu and that which he encountered when he joined Canadian Tire on the eve of Walmart’s onslaught. "We were faced with high prices, a high cost structure and no defined point of differentiation," he wrote. "But guess what? By all accounts, we were successful."
Sales went on to define four immediate goals:
• Generate profitable sales. "We will take immediate steps to profitably improve sales and create points of sustainable differentiation in the marketplace," he wrote. "This will happen while we continue to roll out long-term price improvements."
• Take significant costs out of the business. Sales acknowledged that the company is "doing many things that are not business critical, are of low value or are not focused on driving sales or profitability." While he vowed to change that, he also promised that the company will not take steps that impede its ability to serve customers.
• Grow Save-A-Lot. Sales promised that management will strengthen its engagement with Save-A-Lot licensees and draw on their expertise to enhance the performance of the entire network of hard-discount grocery stores.
• Build on Supervalu’s legacy of serving independent grocers.
Sales concluded by admitting that many customers and investors have lost confidence in and patience with Supervalu as its sales, profitability and share price have declined. But he ended by issuing a challenge and a promise: "We will prove the naysayers wrong."