Supervalu names grocery executive Mark Gross as new CEO

Supervalu has hired a dealmaker lawyer with 20 years' experience in the grocery business as its new chief executive.

The Eden Prairie-based company, which owns Cub Foods, said Wednesday that Mark Gross will take over for Sam Duncan, who announced plans in October to retire by the end of this month. Gross will start on Friday, almost three years to the date that Duncan started the CEO job at Supervalu.

The company was listing badly when Duncan took over and has been in a turnaround mode under his tenure. While Duncan made progress, Gross is taking the reins at a company that seems to have stalled in recent months. And he's assuming command at a time when the already contentious grocery industry is getting more competitive.

Gross, 52, has for the past decade led Surry Investment Advisors, which focuses on consulting for the grocery industry, notably on mergers and acquisitions.

Before that, Gross worked for 10 years with New Hampshire-based C & S, a large grocery wholesaler. He was co-president of C & S in 2005 and 2006, and served as general counsel, chief financial officer and president of the company's retail operations before that.

"Mr. Gross' 20 years of grocery and wholesale leadership experience appear to be a good match for [Supervalu's] diversified business," Stephen Grambling, a Goldman Sachs stock analyst, wrote in a research note Wednesday. "In addition, his experience in acquisitions and divestitures should be useful."

Gross founded Surry, which is based in New Hampshire.

"In an advisory role, he has assisted grocery clients on several multibillion dollar acquisitions and divestitures and consulted with private equity firms with respect to investments in food retail, distribution and consumer packaged goods sectors," Supervalu said in a press statement.

Gross' background should come in handy as Supervalu prepares to spin off its Save-A-Lot chain into a separate publicly traded company — or for that matter if Supervalu itself ends up on the sales block.

Save-A-Lot is a national low-discount chain akin to Aldi that has been Supervalu's fastest-growing business. It made up 26 percent of Supervalu's $17.8 billion in sales last year. Supervalu's conventional grocery stores, including Cub in the Twin Cities, constituted 28 percent of revenue, while the company's wholesale grocery division accounts for 46 percent.

When Duncan was appointed CEO, an embattled Supervalu had just announced the sale of its four largest grocery chains, a $3.3 billion deal that halved Supervalu's size. Duncan, then Supervalu's third CEO in three years, set about reducing costs — including making about 600 job cuts in Minnesota — and making Supervalu more competitive, including reducing its retail prices.

The turnaround gained traction and Supervalu's stock rose from just under $4 when Duncan took over to a high of about $12 in April. But it's fallen since, closing Wednesday at $4.10, down 24 cents or 5.5 percent. Last month, Supervalu's third quarter was weighed down by the company's worst sales numbers since Duncan took over.

Duncan, 64, will continue as an adviser to Supervalu's board until he retires on Feb. 29. He will leave the board then, too, to be replaced by Gross.

Bruce Besanko, Supervalu's chief operating officer, will continue to oversee the day-to-day operations of the company, reporting to Gross. Besanko, who once worked for Duncan at OfficeMax, was hired to be Supervalu's chief financial officer in July 2013 and was promoted in October to chief operating officer, often a steppingstone to the CEO suite.

Gross will receive a signing bonus of $300,000 and a base annual salary of $1 million, about $500,000 less than Duncan has been making, according to filings with the U.S. Securities and Exchange Commission.

Gross will be granted long-term stock incentives now valued at $6 million and an annual cash bonus with a minimum of zero, a target of 100 percent of base salary and maximum of 200 percent.

Gross practiced with a New York City law firm for seven years before entering the grocery business. He has a law degree from the University of Pennsylvania and graduated from Dartmouth College, majoring in history.

"I am thrilled to join Supervalu," Gross said in a press statement. "I am delighted to have the opportunity to help take the company to the next level."

Supervalu declined to make Gross available for an interview Wednesday.

Mike Hughlett • 612-673-7003