Wall Street stocks: Supervalu earnings decline in latest quarter

SuperValu Inc. (New York symbol SVU) operates about 2,500 company-owned and franchised supermarkets. Major banners include Save-A-Lot, Albertsons and Jewel-Osco. Supervalu gets 76% of its revenue from its retail stores. It gets the remaining 24% by supplying food to 1,890 independent stores. The company continues to focus on its core business of food retailing, and has stopped selling other items, such as automotive goods and perfumes, in its stores. In its fiscal 2011 third quarter, which ended December 4, 2010, the Wall Street stock’s sales fell 5.9% to $8.7 billion from $9.2 billion a year earlier. Same-store sales declined 4.9%. The company closed underperforming stores, and was forced to cut its prices due to stronger competition from discount retailers, including Wal-Mart, which is selling more groceries in its stores. The company lost $202 million, or $0.95 a share, in the latest quarter. If you exclude one-time items, including goodwill writedowns and costs related to the store closures, it would have earned $50 million, or $0.24 a share. That’s down 54.1% from $109 million, or $0.51 a share, a year earlier. The lower sales were the main reason for the earnings decline. The company has paid down $1.0 billion of debt in the last year. Its remaining debt of $6.9 billion is 4.3 times its $1.6 billion market cap. You can get our full analysis, including our clear buy/sell/hold advice, on SuperValu and other Wall Street stocks in the Friday, January 14, 2011 Wall Street Stock Forecaster hotline. You can get this hotline, plus one free month of Wall Street Stock Forecaster, when you subscribe now. Click here to learn how.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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