SUPERVALU 1Q-FY2017: $5.20 billion consolidated net sales; net earnings from continuing operations at $47 million

MINNEAPOLIS, 2016-Jul-28 — /EPR Retail News/ — SUPERVALU INC. (NYSE: SVU) today reported first quarter fiscal 2017 consolidated net sales of $5.20 billion and net earnings from continuing operations of $47 million, or $0.17 per diluted share, which included $6 million in net after-tax charges and costs related to a debt refinancing and debt prepayment, the potential separation of Save-A-Lot, and a sales and use tax refund. When adjusted for these items, first quarter fiscal 2017 net earnings from continuing operations were $53 million, or $0.19 per diluted share.

Net earnings from continuing operations for last year’s first quarter were $63 million, or $0.23 per diluted share, which included$2 million in after-tax costs related to the potential separation of Save-A-Lot. When adjusted for this item, first quarter fiscal 2016 net earnings from continuing operations were $65 million, or $0.23 per diluted share. [See tables 1-4 for a reconciliation of GAAP and non-GAAP (adjusted) results appearing in this release.]

“We’re making great progress in growing our business as evidenced by our recent business announcements regarding our agreement with Marsh Supermarkets and our agreement to acquire 22 Food Lion grocery stores,” said President and CEO Mark Gross. “We’re also seeing great success in growing our wholesale produce business, and I believe we’ll sell more produce to our wholesale customers this fiscal year than our wholesale business has sold before.”

“It takes time to bring on new business and our first quarter results reflect the sales run rate we experienced coming out of last year’s fourth quarter,” continued Gross. “We’ve been replacing lost business, and I am confident in our ability to attract new customers and grow our business.”

First Quarter Results – Continuing Operations
First quarter net sales were $5.20 billion compared to $5.41 billion last year, a decrease of $211 million or 3.9 percent. Total net sales within the Wholesale segment decreased 7.6 percent. Retail identical store sales were negative 4.5 percent. Save-A-Lot network identical store sales were negative 1.4 percent. Identical store sales for corporate stores within the Save-A-Lot network were negative 1.0 percent. Fees earned under transition services agreements (“TSAs”) in the first quarter were $58 million compared to $64 million last year.

Gross profit for the first quarter was $779 million, or 15.0 percent of net sales. Last year’s first quarter gross profit was $810 million, or 15.0 percent of net sales. The gross profit rate is flat to last year and includes the impact of lower product margin rates from investments to lower prices to customers, including higher promotional activities, offset by a favorable business segment sales mix from new corporate Save-A-Lot stores.

Selling and administrative expenses in the first quarter were $646 million and included net costs of $1 million, comprised of costs related to the potential separation of Save-A-Lot, offset by a sales and use tax refund. When adjusted for these items, selling and administrative expenses were $645 million, or 12.4 percent of net sales. Selling and administrative expenses in last year’s first quarter were $652 million and included $3 million of costs related to the potential separation of Save-A-Lot. When adjusted for this item, first quarter fiscal 2016 selling and administrative expenses were $649 million, or 12.0 percent of net sales. The increase in the selling and administrative expense rate when compared to last year is primarily due to the deleveraging impact of lower sales and new corporate Save-A-Lot stores.

Net interest expense for the first quarter was $60 million and included $7 million of debt refinancing and debt prepayment charges and costs. When adjusted for these charges and costs, net interest expense was $53 million. Last year’s first quarter interest expense was $59 million. The decrease in interest expense was driven by lower average debt balances.

Income tax expense was $27 million, or 36.6 percent of pre-tax earnings, for the first quarter, compared to an income tax expense of $38 million, or 36.9 percent of pre-tax earnings in last year’s first quarter.

Wholesale
First quarter Wholesale net sales were $2.28 billion, compared to $2.46 billion last year, a decrease of 7.6 percent. The net sales decrease is primarily due to lost stores and lower sales to existing customers, partially offset by increased sales to new stores operated by existing customers and new customers.

Wholesale operating earnings in the first quarter were $64 million, or 2.8 percent of net sales. Last year’s Wholesale operating earnings in the first quarter were $77 million, or 3.1 percent of net sales. The decrease in Wholesale operating earnings was driven by lower sales and higher employee-related costs.

Save-A-Lot
First quarter Save-A-Lot net sales were $1.43 billion, compared to $1.41 billion last year, an increase of 1.7 percent. The net sales increase reflects new corporate and licensed stores, partially offset by network identical store sales of negative 1.4 percent.

Save-A-Lot operating earnings in the first quarter were $39 million, or 2.7 percent of net sales. Last year’s Save-A-Lot operating earnings in the first quarter were $51 million, or 3.6 percent of net sales. The decrease in Save-A-Lot operating earnings was driven by higher employee-related costs from new corporate stores, higher occupancy costs and higher depreciation expense driven by new corporate stores, and higher shrink.

Retail
First quarter Retail net sales were $1.43 billion, compared to $1.47 billion last year, a decrease of 2.9 percent. The net sales decrease reflects identical store sales of negative 4.5 percent, partially offset by sales from new stores.

Retail operating earnings in the first quarter were $8 million, or 0.6 percent of net sales. Last year’s Retail operating earnings were$33 million, or 2.2 percent of net sales. The decrease in Retail operating earnings was driven by lower sales and lower product margin rates from investments to lower prices to customers, including higher promotional activities.

Corporate
First quarter fees earned under the TSAs were $58 million compared to $64 million last year.

Net Corporate operating earnings in the first quarter were $22 million and included $3 million of costs related to the potential separation of Save-A-Lot and a $2 million sales and use tax refund. When adjusted for these items, net Corporate operating earnings were $23 million. Last year’s first quarter net Corporate operating loss was $3 million and included $3 million of costs related to the potential separation of Save-A-Lot. When adjusted for this item, last year’s net Corporate operating earnings were $0. The improvement in net Corporate operating earnings was primarily driven by lower pension expense and lower employee-related costs.

Cash Flows – Continuing Operations
First quarter net cash flows provided by operating activities of continuing operations were $121 million compared to $111 million last year, reflecting lower benefit plan contributions. First quarter net cash flows used in investing activities of continuing operations were $61 million compared to $70 million last year. First quarter net cash flows used in financing activities of continuing operations were $58 million compared to $19 million last year, reflecting higher payments on debt obligations.

Conference Call ­­­
A conference call to review the first quarter results is scheduled for 9:00 a.m. central time today. The call will be webcast live at www.supervaluinvestors.com (click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website replay go to the “Investors” link and click on “Presentations and Webcasts.”

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.

SUPERVALU reports $4.11 billion net sales in Q3 fiscal 2016

  • Consolidated operating earnings of $101 million; Adjusted EBITDA of $182 million for Q3 fiscal 2016
  • Net earnings per share from continuing operations of $0.13; adjusted earnings per share of $0.16
  • Redeemed remaining $278 million of 8.00% Senior Notes due May 2016 on January 6, 2016

MINNEAPOLIS, 2016-01-13 — /EPR Retail News/ — SUPERVALU INC. (NYSE: SVU) today reported third quarter fiscal 2016 net sales of $4.11 billion and net earnings from continuing operations of $35 million, or $0.13 per diluted share, which included $11 million in after-tax charges and costs related to asset impairments, the potential separation of Save-A-Lot, and employee severance. When adjusted for these items, third quarter fiscal 2016 net earnings from continuing operations were $46 million, or$0.16 per diluted share.

Net earnings from continuing operations for last year’s third quarter were $12 million, or $0.04 per diluted share, which included a$36 million after-tax pension settlement charge and $1 million in after-tax debt refinancing and net information technology intrusion costs. When adjusted for these items, third quarter fiscal 2015 net earnings from continuing operations were $49 million, or $0.18 per diluted share. [See tables 1-5 for a reconciliation of GAAP and non-GAAP (adjusted) results appearing in this release.]

“Although third quarter adjusted EBITDA was in-line with our operating plan, we continue to operate in a challenging environment,” said President and CEO Sam Duncan. “Improving sales is a primary focus as we look to complete the fiscal year.”

Third Quarter Results – Continuing Operations

Third quarter net sales were $4.11 billion compared to $4.23 billion last year, a decrease of $111 million or 2.6 percent. Save-A-Lot network identical store sales were negative 3.4 percent. Identical store sales for corporate stores within the Save-A-Lot network were negative 0.4 percent. Retail Food identical store sales were negative 2.6 percent. Total net sales within the Independent Business segment decreased 3.5 percent. Fees earned under transition services agreements (“TSAs”) in the third quarter were $46 million compared to $43 million last year.

Gross profit for the third quarter was $601 million, or 14.6 percent of net sales. Last year’s third quarter gross profit was $596 million, or 14.1 percent of net sales. The increase in gross profit rate compared to last year was primarily driven by higher base margins across all three segments, lower logistics costs, and higher TSA fees, partially offset by higher employee and occupancy costs.

Selling and administrative expenses in the third quarter were $494 million and included charges and costs of $10 million for the potential separation of Save-A-Lot, store closure impairments and employee severance. When adjusted for these items, selling and administrative costs were $484 million, or 11.7 percent of net sales. Selling and administrative expenses in last year’s third quarter were $540 million and included a $63 million pension settlement charge and $1 million in information technology intrusion costs, net of insurance recoverable. When adjusted for these items, last year’s selling and administrative expenses were $476 million, or 11.3 percent of net sales.

Net interest expense for the third quarter was $45 million. Last year’s third quarter interest expense was $46 million and included$1 million in debt refinancing costs. When adjusted for this item, last year’s third quarter interest expense was $45 million.

Income tax expense was $22 million, or 37.6 percent of pre-tax earnings, for the third quarter, compared to an income tax benefit of $1 million, or 8.9 percent of pre-tax earnings in last year’s third quarter. The increase in the effective tax rate is primarily due to the pension settlement charge included in the prior year.

Independent Business

Third quarter Independent Business net sales were $1.90 billion, compared to $1.97 billion last year, a decrease of 3.5 percent. The decrease is primarily due to lower sales to existing customers and lost stores, partially offset by increased sales to new customers and new stores operated by existing customers.

Independent Business operating earnings in the third quarter were $54 million, or 2.8 percent of net sales, and included a $6 million intangible asset impairment charge. When adjusted for this item, Independent Business operating earnings were $60 million or 3.2 percent of net sales. Last year’s Independent Business operating earnings in the third quarter were $60 million, or 3.1 percent of net sales.

Save-A-Lot

Third quarter Save-A-Lot net sales were $1.07 billion, compared to $1.09 billion last year, a decrease of 1.5 percent. The sales decrease reflects identical store sales across the Save-A-Lot network of negative 3.4 percent and the impact of closed stores.

Save-A-Lot operating earnings in the third quarter were $32 million, or 2.9 percent of net sales, and included $2 million of store closure impairment charges. When adjusted for this item, Save-A-Lot’s operating earnings were $34 million, or 3.1 percent of sales. Last year’s Save-A-Lot operating earnings in the third quarter were $34 million, or 3.1 percent of net sales.

Retail Food

Third quarter Retail Food net sales were $1.10 billion, compared to $1.13 billion last year, a decrease of 2.5 percent. The sales decrease reflects negative identical store sales of 2.6 percent.

Retail Food operating earnings in the third quarter were $21 million, or 2.0 percent of net sales, and included $1 million of store closure impairment charges. When adjusted for this item, Retail Food operating earnings were $22 million, or 2.1 percent of sales. Last year’s Retail Food operating earnings were $28 million, or 2.5 percent of net sales. The decrease in Retail Food operating earnings was driven by higher employee-related costs.

Corporate

Third quarter fees earned under the TSAs were $46 million compared to $43 million last year.

Net Corporate operating loss in the third quarter was $6 million and included $7 million of costs related to the potential separation of Save-A-Lot and employee severance. When adjusted for these items, net Corporate operating earnings were $1 million. Last year’s third quarter net Corporate operating loss was $66 million and included $64 million in charges and costs for a pension settlement charge and information technology intrusion costs, net of insurance receivable. When adjusted for these items, last year’s net Corporate operating loss was $2 million. The improvement in net Corporate operating earnings was primarily driven by lower employee-related costs and higher fees earned under the TSAs.

Cash Flows – Continuing Operations

Year-to-date fiscal 2016 net cash flows provided by operating activities of continuing operations were $251 million compared to$104 million last year, reflecting lower levels of investment in working capital and lower benefit plan contributions. Year-to-date net cash flows used in investing activities of continuing operations were $198 million compared to $209 million last year. Year-to-date net cash flows used in financing activities of continuing operations were $34 million compared to net cash flows provided by financing activities of $438 million last year, which included proceeds from a bond issuance.

Conference Call ­­­
A conference call to review the third quarter results is scheduled for 9:00 a.m. central time today. The call will be webcast live at www.supervaluinvestors.com (click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website replay go to the “Investors” link and click on “Presentations and Webcasts.”

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 3,407 stores composed of 1,871 independent stores serviced primarily by the Company’s food distribution business; 1,336 Save-A-Lot stores, of which 883 are operated by licensee owners; and 200 traditional retail grocery stores (store counts as of December 5, 2015). 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 initiatives, 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, governmental regulation, food and drug safety issues, legal proceedings, 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.

Source: SUPERVALU INC.

SUPERVALU INC.
Investor Contact
Steve Bloomquist, 952-828-4144
steve.j.bloomquist@supervalu.com
or
Media Contact
Jeff Swanson, 952-903-1645
jeffrey.s.swanson@supervalu.com