Supervalu Inc. on Tuesday rattled investors with a relatively weak annual profit outlook coupled with a continued sharp decline in sales -- a downturn that has no quick end in sight.
Wall Street reacted by sending shares down 5 percent. The stock closed at $16.27, down 87 cents on a day the major indexes posted gains.
Supervalu, like most big traditional grocery chains, has been slammed by recession, falling food prices and intense competition from discount supermarkets like Wal-Mart. Tuesday, while it posted fourth-quarter profits that topped expectations, Supervalu didn't make a convincing argument to Wall Street that it's out of the storm.
"There's nothing to suggest things have turned," said Scott Mushkin, a stock analyst with Jefferies & Co. "The [grocery] industry is getting a little better, but they are seeing none of that."
Mushkin said Supervalu's 3 percent drop in customer traffic during its fourth quarter was worse than the declines of the previous two quarters. "That is just kind of unnerving," he said.
The company's same-store sales, a key financial gauge, fell 6.8 percent compared with the same quarter last year, considerably worse than the 6.1 percent drop that analysts, on average, had expected.
"The economy will continue to pressure consumer spending," Pam Knous, the company's chief financial officer, said in a conference call Tuesday with stock analysts.
Supervalu, which operates Cub Foods locally, expects that its same-store sales will improve during its current fiscal year, which began Feb. 28. Yet those sales are still expected to decline 2 percent for the entire year. Some analysts seemed incredulous that Supervalu would even reach that goal.
