Supervalu's turnaround kept rolling during the latest quarter, as sales bloomed at the company's discount Save-A-Lot chain and its long-suffering conventional supermarkets continued inching forward.
The Eden Prairie-based grocery company still has a long way to go; indeed, sales sagged at its important wholesale division during its fiscal first quarter. But Supervalu is a far cry from the corporate basket case that sold off its four largest supermarket operations just last year.
The company's stock Thursday rose 24 cents, or 2.7 percent, closing at $9.12, a 52-week high. Shares had wallowed at 30-year lows two years ago.
"The momentum we generated in last year's fourth quarter continued into this year," Supervalu CEO Sam Duncan told analysts. "I continue to be encouraged by the many positives underpinning our businesses."
Analysts were encouraged by Supervalu's strong top line for the quarter, though they noted that it didn't trickle down to the bottom line as much as some would have liked. But Supervalu has aggressively cut prices to make its supermarkets more competitive, a damper on profit growth rates.
"Today's results clearly show management is making progress, but the limited earnings flow from top-line strength may not be enough to match bullish short-term expectations," Oppenheimer analyst Rupesh Parikh wrote in a report. "We continue to look favorably on Supervalu's turnaround and would use any potential weakness today to accumulate shares."
Supervalu reported adjusted profit from continuing operations of $50 million, or 18 cents per share, in its fiscal first quarter ended June 14. That beat the 17 cents expected by analysts polled by Thomson Reuters and the 14 cents recorded in the year-ago quarter.
Supervalu recorded sales of $5.23 billion, down from $5.24 billion a year ago, but above analysts' estimates of $5.19 billion.
