Supervalu Inc. on Wednesday made another acquisition to bolster its position as a leading grocery wholesaler, and its shares rode a roller coaster.
The company early in the day reported quarterly results that met Wall Street expectations and announced the $180 million purchase of Associated Grocers of Florida Inc., its second big purchase in the wholesale business this year.
Its shares jumped more than 10 percent in early trading. But they began to fall as executives held a conference call with analysts. And, on a day in which the broader stock market closed at record highs, Supervalu shares finished down 11 percent, leaving them off nearly 50 percent for the year so far.
With the purchase of Associated Grocers, Supervalu adds a business with $650 million in annual revenue and customers in South Florida and portions of the Caribbean, Central and South America and Asia. "Associated Grocers represents a great opportunity for us to further expand our wholesale business into another important region," said Supervalu Chief Executive Mark Gross.
Earlier this year, Supervalu acquired California-based Unified Grocers.
"With these two deals, Supervalu becomes the most important wholesaler to the Hispanic community," said Burt Flickinger, managing director of Strategic Resource Group in New York. "They're the best two deals Supervalu has made in the last 30 years."
Wednesday's earnings report showed that Unified Growth boosted Supervalu's overall sales during the July-September quarter, but its grocery stores saw revenue fall for the 10th period in a row and one-time charges pushed its bottom line into the red.
Supervalu reported a net loss of $25 million for the 12 weeks ended Sept. 9, the second quarter of its fiscal year. That included a $27 million tax impairment charge and $16 million in after-tax merger and integration costs.