Supervalu Inc. on Wednesday reported sales declines for its most recent quarter that were bigger than Wall Street expected, prompting investors to punish the struggling grocery giant.
Its shares fell 12.5 percent, making it the day's second-biggest percentage loser in the Standard & Poor's 500 index.
The quarterly results were a reminder that despite intensive rebuilding efforts, Eden Prairie-based Supervalu has yet to regain crucial sales momentum, outflanked by discount food retailers like Wal-Mart and even competing traditional supermarket chains.
Supervalu, one of the country's largest supermarket operators and owner of leading Twin Cities grocer Cub Foods, posted a fiscal third-quarter net loss of $750 million, or $3.54 per share, compared with a loss of $202 million, or 95 cents per diluted share, a year earlier.
Excluding several one-time charges -- mostly to adjust for the declining value of certain Supervalu assets -- the company earned $50 million, or 24 cents a share, in line with analysts' estimates from Thomson Reuters.
However, other services pegged the consensus forecast at 25 cents per share, meaning Supervalu by those accounts would have missed estimates by a penny. That could have helped push down the stock Wednesday, said Ajay Jain, an analyst at Cantor Fitzgerald.
Shares closed at $7.34, down $1.05.
Sales trends weighed heavily on the stock. Supervalu's quarterly revenue of $8.33 billion was down 4.5 percent from a year earlier and short of analysts' estimates -- as tabulated by Thomson Reuters -- of $8.42 billion.
Supervalu lowered its sales guidance for its full fiscal year to $36.1 billion from $36.5 billion -- the second downward sales revision in the past two quarters.
And the company's same-store sales, a key financial metric that adjusts for newly opened outlets, fell by 2.9 percent from a year earlier, the 15th consecutive quarter to show a decline.
The rate of Supervalu's same-store sales decline had been improving -- it was 1.8 percent in the previous quarter -- but that trend halted.
"We are concerned that [Supervalu's same-store sales] experienced the first sequential deceleration since [2011's fiscal fourth quarter], and we expect price competition from Wal-Mart and other alternative formats to heat up in the coming quarters," Deborah Weinswig, a stock analyst at Citigroup, wrote in a note Wednesday.
Jain of Cantor Fitzgerald said there's evidence that Supervalu's same-store sale declines have bottomed out. "But even if you believe they have bottomed out, that doesn't mean Supervalu is going to have positive [same-store] sales in the foreseeable future."
Supervalu has been challenged in recent years by the weak economy, as have all traditional grocery chains, which tend to have higher prices than discounters like Wal-Mart and Target.
But Supervalu peer Safeway has seen its same-stores growth turn from negative to slightly positive in recent quarters. And other big supermarket operators have done even better.
Part of Supervalu's problem is price -- it was relatively late in lowering its price gap with discounters like Wal-Mart. The company is in the midst of a major effort to reduce prices on key items without denting its profit margins.
Supervalu Chief Executive Craig Herkert says the campaign is working. In a conference call Wednesday, Herkert told analysts there has been an "improvement in price which is increasingly noticeable to our consumers and sustainable for our business."
Herkert took the CEO reins in May 2009, aiming to turn around a lumbering Supervalu. A key part of his plan involves expanding Sav-A-Lot, Supervalu's deep-discount format that has about 1,300 stores nationwide, many of them operated by franchisees.
Supervalu had originally planned to add up to 160 Sav-A-Lot stores in its current fiscal year. But last quarter, it revised that goal downward to 80 to 90 stores, and Wednesday lowered it again to 50 to 60 stores.
Herkert told analysts that "general economic uncertainty" coupled with financing hurdles for franchisees have impeded Sav-A-Lot's growth. Still, he said Sav-A-Lot's same-store sales were up nearly 4 percent during the quarter, due partly to innovative marketing programs.
Mike Hughlett • 612-673-7003
