Every investor's portfolio has one: an established, even profitable company stuck in a state of permanent turnaround.
Or, as the corporate wordsmiths prefer to call it, "transformation."
Maybe a weak economy has exposed fundamental flaws in the business. Perhaps the company is losing customers to new or newly emboldened competitors, or trying to undo or recover from mistakes of its own making.
And sometimes it's a combination of all these factors and more.
Which brings us to Supervalu. The Eden Prairie-based firm is best known in these parts as the owner of Cub Foods. Nationally, though, it has the distinction of being both the third-largest supermarket chain and the least loved.
Sales have fallen for three consecutive years. The dividend has been slashed. The share price is down 85 percent since the end of 2006 and about 50 percent since the middle of 2009, when Wal-Mart veteran Craig Herkert succeeded Jeff Noddle as CEO.
Noddle was the architect of Supervalu's $12.4 billion acquisition of the Albertsons supermarket chain in 2006, a deal that came straight from the assembly line of Bad Timing Inc.
Financing was cheap, consumers didn't fuss over having to pay a little extra at the grocery store and the unemployment rate was 4.6 percent.
The initial promising returns from the combination soon fizzled into 15 straight quarters of declining same-store sales. In layman's terms, this means Supervalu's stores -- which include Cub, Albertsons, Jewel-Osco and Acme -- are losing customers to rivals, and that efforts to win them back have been mostly futile.
Supervalu, which would only respond in writing to questions submitted by e-mail, maintains that it is stronger and better positioned today than it was a year ago.
Here's how Herkert put it in an October conference call, after a Wall Street analyst asked whether the CEO had any hard data to suggest that Supervalu was winning customers back.
"Our value proposition here, our business transformation, is a long-term proposition to make sure we are a great, relevant local retailer everywhere," Herkert said. "So I would just say it's too early to give you an answer to that."
To be fair, Herkert inherited a mess. Noddle overpaid for a weak chain, saddling Supervalu with more than $6 billion in debt and putting it in more direct competition with Wal-Mart and Target. Albertsons stores were often the most expensive in their local markets, and many were badly in need of an upgrade.
To complicate matters, nearly a quarter of those stores were in markets that ended up being hardest hit by the foreclosure crisis.
"Even the best managers in the world would have trouble making a go of it," said Alfred Marcus, a Supervalu shareholder and professor at the University of Minnesota's Carlson School of Management who was an early skeptic of the deal.
As Marcus sees it, Supervalu's biggest problem is that most of its traditional retail banners, including Cub, fail to excite or interest consumers. They will rarely be able to compete with Wal-Mart on prices, and they present consumers with run-of-the-mill offerings that suffer next to the likes of a Costco or Whole Foods.
Even shopping at Rainbow, which has invested heavily in remodeling its stores, is a more pleasant experience than navigating the typical Cub warehouse.
With no growth coming from its traditional supermarket banners, Supervalu shifted its focus to its deep-discount Save-A-Lot chain. The stores are a third the size of a traditional grocery store, and stocked almost entirely with private label products. That makes them less costly to build and more profitable to operate.
In May, the company announced that it would ramp up expansion plans for Save-A-Lot and open up to 160 stores in the coming year. In October, it slashed that total in half, saying it would instead spend more money on remodeling its existing supermarkets.
One problem: Remodeling stores in recent years has not slowed the loss of customers. A company spokesman said Supervalu has since developed "more stringent" criteria in selecting the stores to remodel.
Investors remain skeptical. Supervalu's shares are down 17 percent since the change in course. Four analysts have a "sell" rating on the stock, twice the number who rate it a "buy."
Inevitably, you have to wonder if Supervalu's problems are fixable at all, or fixable by current management.
Burt Flickinger, president of the New York City retail consultancy Strategic Resource Group, thinks they are. He likes the fact that Supervalu's distribution business, which accounts for about a quarter of total revenue, is profitable and growing. He believes an expanded line of private label products should help the chain offer consumers better prices.
But even he's not expecting much in the way of good news in the near future.
"It's still going to be tremendously tough in 2012," he said.
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