Amid investor pressure to boost value, Supervalu Inc. said Tuesday it was selling eight of its distribution centers and looking for a buyer for Shop 'n Save grocery stores.
The moves came as the Eden Prairie-based food wholesaler and retailer reported a small jump in its quarterly profit from ongoing operations and said that comparable sales at its grocery chains, which include Twin Cities market leader Cub Foods, rose 0.1 percent after many quarters of declines.
While putting Shop 'n Save on the block, Supervalu will continue to invest in other retail banners, including Cub, Rob Woseth, the company's new chief financial officer, told investors. Going forward with its strongest retail performers, Woseth said that comparable sales in the new fiscal year are expected to be flat to slightly positive.
Supervalu said it earned $25 million from continuing operations in the three months ended Feb. 24, the last quarter of its fiscal year. A year earlier, it earned $24 million from continuing operations.
Revenue was $3.59 billion, a 42 percent gain shaped chiefly by the acquisitions of Unified Grocers in California and Associated Grocers of Florida.
Supervalu said a buyer has agreed to pay $483 million for the eight distribution centers, including three in Illinois, one in Green Bay, Wis., two in California and one each in Florida and Pennsylvania. The company will lease back space in the warehouses, which have a combined space of 5.8 million square feet, for 20 years. Supervalu will continue to own another 13 million square feet of real estate.
"We've capitalized on our business momentum by taking several decisive, strategic actions that further our transformation," Chief Executive Mark Gross said.
The sale of the distribution centers and Shop 'n Save stores will enable the company to meaningfully pay down debt and improve the balance sheet, Gross said. One group of Shop 'n Save stores are in the St. Louis area and another operate in mid-Atlantic states of West Virginia, Pennsylvania, Virginia and Maryland.
The previously announced sale of another grocery chain Supervalu owns, Farm Fresh, is expected to close in May.