Supervalu Inc. tumbled into the red during the fall as its grocery stores, including Twin Cities market leader Cub Foods, came under greater competitive pressure.
Pressure on Cub Foods, other grocery operations, send Supervalu into the red
The company's adjusted profit fell, pressured by increasing competition.
January 12, 2017 at 2:49AM
![Workers looked over the new Oakdale Cub Foods minutes before opening for a VIP open house. ] GLEN STUBBE * gstubbe@startribune.com Monday, May 9, 2016 Cub Foods' opens its new location in Oakdale on Tuesday, moving across the street from its former, smaller location. The expanded store will be a better competitor to neighboring Hy-Vee. Both are nearly 90,000 square feet with big produce sections, large convenience food areas, pharmacies and liquor stores.](https://arc.stimg.co/startribunemedia/HZF6SFIXXVBOBA2F2TTA7YAHVI.jpg?&w=712)
"We have an unprecedented amount of new competition at two-thirds of our stores," Bruce Besanko, the company's chief financial officer, said after its latest results were announced Wednesday. "We're unhappy with our retail performance."
The competition has been evident in the Twin Cities, where full-service Hy-Vee Food Stores and discounter Aldi Foods have made expansive moves over the last 18 months. But Eden Prairie-based Supervalu is also seeing similar pressure in its St. Louis-based Shop 'N Save store chain.
The company's wholesale division, its largest business, reported some improvement during the three months that ended Dec. 3. But it wasn't enough to overcome the trouble in its retail unit, which reported a same-store sales decline of 5.7 percent.
The company's bottom line, including charges for store closings and a pension-related settlement, showed a loss of $11 million, or 4 cents a share. Analysts had expected a profit of 13 cents a share.
Supervalu shares fell 7.5 percent after the news Wednesday and are down about 40 percent over the past year.
Its adjusted profit, excluding the one-time charges, was $14 million, down from $16 million a year ago. Revenue was down 1 percent to $3 billion.
Net sales in its wholesale division rose 0.2 percent. Last year, the company landed supply and distribution deals with retailers such as Fresh Market, America's Food Basket and Marsh Supermarkets. The company expects those new accounts to add even more revenue in 2017 as pilot programs are expanded companywide.
Eden Prairie-based Supervalu sold the discount grocery chain Save-A-Lot late last year. The company reported that the sale reduced its debt by $1.1 billion.
The company also made a $15 million cash contribution to its pension plan.
"The successful sale of Save-A-Lot early in the fourth quarter provides Supervalu with additional flexibility to operate and grow our business," Mark Gross, the chief executive, said in a statement. "Additionally, our Wholesale team has done a tremendous job delivering for our customers."
On the retail side, Gross said the company is trying to combat sales losses by reducing out-of-stock merchandise, doing a better job of selecting merchandise based on store location, and adding more merchandise displays on the floor.
To build retail sales the company plans to roll out "Click and Collect" as part of its e-commerce offerings.
In the Twin Cities, Cub Foods shoppers will be able to choose store pickup at select locations.
Home delivery via Instacart debuted last year at Cub stores in select ZIP codes, but starting in February customers can choose either option.
Supervalu, which employs 30,000 people in the U.S., includes a wholesale division to supply its own stores and others and a retail division with Cub Foods, Farm Fresh, Hornbachers, Shop 'N Save and Shoppers.
John Ewoldt • 612-673-7633
Health care spending rose by 15%, driven by higher prices. Officials say solutions are needed to prevent Minnesotans from being priced out or delaying care they need.
