Supervalu is back in the black, but the new tax law is causing a hiccup

Just as Supervalu Inc. was starting to gain some traction in its quarterly results, the company revealed in its latest results Wednesday that the new tax law will hurt its bottom line for the rest of its fiscal year.

The news helped send Supervalu's shares down nearly 14 percent.

Supervalu, based in Eden Prairie, said it will take a charge of up to $45 million in the last three months of its fiscal year, which ends in early March, to account for reducing the carrying value of deferred tax assets as a result of the new tax law.

It now expects full-year profit from continuing operations to range from a loss of $20 million to a profit of $2 million. It had previously expected that profit to range from $31 million to $50 million.

Supervalu earned $18 million, or 46 cents a diluted share, from continuing operations during the three months ended Dec. 2, the third quarter of its fiscal year.

That's a turnaround from a loss of $11 million in the same period a year earlier. The adjustments covered $4 million in acquisition-related costs and $1 million in costs for store closings.

Sales shot up 31 percent to $3.94 billion, helped by the acquisition of Unified Grocers in its wholesale division.

With that deal, Supervalu saw its wholesale net sales jump 52 percent to $2.89 billion. "We continue to achieve strong underlying growth in our wholesale business," Supervalu CEO Mark Gross said in a statement.

The business saw its adjusted operating profit fall to $48 million from $52 million in the year-ago period.

Sales in Supervalu's retail business, which includes Cub Foods, the largest grocery chain in the Twin Cities, fell 4 percent to $1.02 billion. Same-store sales, or those open at least a year, fell 3.5 percent.

The retail unit experienced an operating loss of $6 million, which was an improvement from an operating loss of $14 million in the year-ago quarter.

Five stores have closed in the past 12 months, including the Rainbow Midway store in St. Paul, two Farm Fresh stores in Virginia and two Shop n' Save stores in St. Louis. Five more are expected to close in coming months, interim Chief Financial Officer Rob Woseth said during a call with analysts. Banners and locations have not been announced.

John Ewoldt • 612-673-7633