SUPERVALU INC. lowers its outlook for full-year adjusted EBITDA

MINNEAPOLIS, 2016-Sep-09 — /EPR Retail News/ — SUPERVALU INC. (NYSE:SVU) today (Sep. 8, 2016) announced that it is lowering its outlook for full-year adjusted EBITDA(1). Although recently announced new business in its Wholesale segment is expected to begin to positively contribute to results later this fiscal year, second quarter business performance in its Retail and Save-A-Lot segments has been softer than previously anticipated. Full year adjusted EBITDA(1) is now expected to be approximately 5.0% lower than last year.

Commenting on the outlook for fiscal 2017, President and CEO Mark Gross said, “Although we are seeing softness in portions of our business, I am excited and encouraged by the recent announcements pertaining to new customers for our core Wholesale segment and the opportunities that exist to further grow that business. In addition to the already announced two new large customers, we have recaptured some previously lost business from two other customers. We look forward to adding the volume from these new customers and do not expect any meaningful customer losses for the remainder of this fiscal year.”

The second quarter performance of the Company’s Retail segment has been impacted to a greater than anticipated degree by competitive openings and a challenging sales and operating environment for its stores. The second quarter performance of the Company’s Save-A-Lot segment has been impacted by deeper levels of deflation as well as lower levels of SNAP (supplemental nutrition assistance program) benefits compared to the first quarter. These factors affecting the Retail and Save-A-Lot segments are expected to impact the second half of the fiscal year as well. In addition, the second quarter performance at Save-A-Lot has been impacted by an aggressive rollout of store resets which is expected to benefit results at Save-A-Lot later in the year. The Company now expects the second quarter identical store sales percentage for its Retail stores and for Save-A-Lot’s store network will be lower than the first quarter identical store sales percentage. The Company’s second quarter ends September 10.

As previously announced, the Company will participate in the Goldman Sachs Global Retailing Conference in New York on Thursday, September 8, 2016 at approximately 11:20 a.m. (Eastern Time) and expects to address the Company’s outlook in more detail at that time. A live webcast of this event will be available through the SUPERVALU website at http://www.supervaluinvestors.com (click on microphone icon). A replay will be archived on SUPERVALU’s website by going to the “Investors” link and clicking on “Presentations and Webcasts.”

(1) The Company defines Adjusted EBITDA as Net earnings (loss) from continuing operations, plus Interest expense, net and Income tax provision (benefit), less Net earnings attributable to non-controlling interests calculated in accordance with GAAP, plus non-GAAP adjustments for Depreciation and amortization, LIFO charge (credit), certain employee-related costs and pension-related charges (including severance costs, pension settlement charges, multiemployer pension withdrawal charges, accelerated stock-based compensation charges and other items), certain non-cash asset impairment and other charges (including asset write-offs, store closures and market exits), certain gains and losses on the sale of property, goodwill and intangible asset impairment charges, costs related to the separation of businesses, legal settlement charges and gains, contract breakage costs and certain other non-cash charges or items as determined by management.

These items are omitted either because they are non-cash items or are items that are not considered in our supplemental assessment of our on-going business performance. Certain of these adjustments are considered in similar supplemental analyses by other companies, such as Depreciation and amortization, LIFO charge (credit) and certain other adjustments. Adjusted EBITDA is less disposed to variances in actual performance resulting from depreciation, amortization and other non-cash charges and credits, and more reflective of other factors that affect the Company’s underlying operating performance. There are significant limitations to using Adjusted EBITDA as a financial measure including, but not limited to, it not reflecting cash expenditures for capital assets or contractual commitments, changes in working capital, income taxes and debt service expenses that are recurring in the Company’s results of operations.

The adjustments for the Company’s first quarter fiscal 2017 include: net earnings attributable to non-controlling interests, $(1) million; income tax provision, $27 million; interest expense, net, $60 million; depreciation and amortization, $86 million; LIFO charge, $2 million; costs related to the potential separation of Save-A-Lot, $3 million; sales and use tax refund, $(2) million. The adjustment items occurring in the first quarter will continue for the balance of the fiscal year, with the exception of the sales and use tax refund. Additional non-cash or other adjustments not related to our on-going business performance may arise during the remainder of fiscal 2017. Adjustments for the Company’s fiscal 2017 second quarter are anticipated to include the following, a customer contract settlement gain, severance, impairment and employee benefit plan charges. For the second half of the year, the Company also anticipates a pension settlement charge. Each of the anticipated adjustments are preliminary and subject to change, and as a result, the Company is not currently able to provide guidance on Net earnings (loss) before continuing operations, which is the most comparable GAAP measure to Adjusted EBITDA.

About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $18 billion. SUPERVALU serves customers across the United States through a network of 3,342 stores composed of 1,773 stores operated by wholesale customers serviced primarily by the Company’s food distribution business; 1,368 Save-A-Lot stores, of which 896 are operated by licensee owners; and 201 traditional retail grocery stores (store counts as of June 18, 2016). Headquartered in Minnesota, SUPERVALU has approximately 40,000 employees. For more information about SUPERVALU visit www.supervalu.com.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

Except for the historical and factual information contained herein, the matters set forth in this news release, particularly those pertaining to SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as “estimates,” “expects,” “projects,” “plans,” “intends,” and similar expressions are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including competition, ability to execute operations and initiatives, ability to realize benefits from acquisitions and dispositions, impact of exploration of possible separation of Save-A-Lot, reliance on wholesale customers and licensees ability to grow or maintain identical store sales, ability to maintain or increase margins, substantial indebtedness, labor relations issues, escalating costs of providing employee benefits, relationships with Albertson’s LLC, New Albertson’s Inc., and Haggen, intrusions to and disruption of information technology systems, impact of economic conditions, commodity pricing, governmental regulation, food and drug safety issues, legal proceedings, pharmacy reimbursement and health care financing, intellectual property protection, severe weather, natural disasters and adverse climate changes, disruption to supply chain and distribution network, changes in military business, adequacy of insurance, volatility in fuel and energy costs, asset impairment charges, fluctuations in our common stock price and other risk factors relating to our business or industry as detailed from time to time in SUPERVALU’s reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required,SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contact:
Steve Bloomquist
952-828-4144
steve.j.bloomquist@supervalu.com

Media Contact:
Jeff Swanson
952-903-1645
jeffrey.s.swanson@supervalu.com

Source: SUPERVALU INC.