Supervalu Inc. reported a $1.47 billion loss for the second quarter as a result of charges related mainly to a labor dispute at its Shaw’s Supermarkets Inc. unit.


Supervalu, second quarter, loss, Craig Herkert, Shaw's Supermarkets, earnings, revenue, same-store sales, supermarket, Greg Jacobson


















































































































































































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Supervalu reports loss, cuts forecast

October 19th, 2010

MINNEAPOLIS – Supervalu Inc. reported a $1.47 billion loss for the second quarter as a result of charges related mainly to a labor dispute at its Shaw’s Supermarkets Inc. unit.

With continued weakness at the top line, the supermarket retailer and wholesaler lowered its full-year outlook for earnings and same-store sales, prompting a 13% drop in share price in mid-day trading on Tuesday.

Excluding an after-tax charge of $1.52 billion, or $7.16 per share, for goodwill impairment and $13 million, or 6 cents per share, for other charges, adjusted earnings for the second quarter were $59 million, or 28 cents per share, a penny shy of the consensus estimate of analysts polled by Thomson Reuters. Sales fell 9% to $8.66 billion, also short of analysts’ target of $8.74 billion.

The revenue decrease resulted mainly from market exits and a 6.4% drop in identical-store sales. Even excluding the Shaw’s stores affected by the labor action, identical-store sales fell 5.9%.

“Our sales performance continues to reflect a difficult operating environment,” said Craig Herkert, president and chief executive officer, in a statement. “As the company moves into the next phase of its business transformation, we remain focused on our customers and taking actions that will better meet their needs. I remain confident that we have the correct strategy in place to achieve long-term success.”

The company lowered its adjusted earnings forecast to a range of $1.40 to $1.60 per share, excluding noncash charges, down from previous guidance of $1.75 to $1.95 per share.

Analysts had expected $1.69 per share. Including special items, the GAAP loss is expected to range between $5.94 and $5.74 per share.

At the same time, management now predicts that identical-store sales for fiscal 2011 will fall 5.5%, a steeper decline than the 5% decrease previously projected.

“It will take longer than originally anticipated to realize the benefit of the marketing, merchandising and operational initiatives that we continue to build upon,” said Herkert. “Accordingly, we our adjusting our guidance to better reflect this outlook.”

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