Supervalu Bucks Supermarket Trend with Net Loss
Unlike several other major supermarket retailers, Supervalu Inc. reported net losses for both Q4 and fiscal year 2009. The retailer did post increases in several other financial areas. Selected financial highlights for the fiscal quarter and year follow.
Impairments Charges Add Up to Net Loss
During Q4 2009, Supervalu reported a net loss of $201 million, compared to net earnings of $156 million in Q4 2008. For the fiscal year, Supervalu reported a net loss of $2.9 billion, compared to net earnings of $593 million in fiscal 2008.
Supervalu attributed the net loss to mostly non-cash impairment charges related to store closures and settlement and acquisition costs related to its purchase of stores from supermarket chain Albertson’s. Without these charges, Supervalu said quarterly net earnings would have been $185 million, an 18.5% increase, and annual net earnings would have been $615 million, a roughly 4% increase.
Net Sales Slightly Climb
Supervalu reported quarterly net sales of $8.5 billion and annual net sales of $44.6 billion. Respectively, these figures represent a roughly 5% increase from $8.1 billion and 0.1% increase from $44 billion.
Quarterly Gross Margins Slightly Fall
Supervalu reported quarterly gross margins of $2.5 billion, or 22.9% of sales, compared to $2.4 billion, or 23.3% of net sales in Q4 2008. Supervalu attributed this decline to the impact of investments in price and promotional spending, inventory-related charges and LIFO (last in, first out) charges, partially offset by favorable shrink.
Fiscal 2010 Guidance
Unlike many other retailers across different verticals, Supervalu offered detailed guidance for the new fiscal year. The retailer expects net sales of approximately $43 billion, a roughly 3% drop from fiscal 2009, debt reduction of $700 million, and capital spending of $750 million. The capital spending estimate includes the cost of 75 to 80 major store remodels, 30 to 40 minor remodels, three new traditional supermarkets and 50 to 60 new limited assortment stores, including 35 licensed stores. In fiscal 2009, Supervalu completed 161 major remodels, 17 minor remodels, 14 new traditional stores and 25 new limited assortment corporate stores.
Competitive Segment Analysis
Other major U.S. supermarket operators also reported gains in annual net sales, but Supervalu stands out for reporting an unadjusted net loss. Kroger saw sales increase 8% and earnings increase 5%, while Publix saw sales rise 4% and earnings decrease 8%, but remain $1.1 billion in the black. Delhaize America’s sales grew 5.9% and earnings climbed 3.6%.
Supervalu operates approximately 2,500 stores across the U.S.