Supervalu eliminates 600 jobs in Minnesota

Supervalu is eliminating about 600 jobs in Minnesota, mostly by slashing 38 percent of its headquarters workforce just days after completing the sale of its four largest grocery chains.

The $3.3 billion sale that was closed last Thursday reduced the Eden Prairie-based company to a little less than half its former size, with about $17 billion in annual revenue. That means the company will require "significantly fewer corporate and store support roles," Supervalu said in a news release on Tuesday announcing the cuts.

"The decision to reduce our workforce, although difficult because of the impacts to our people, is the necessary next step in the rebuilding of our business," Supervalu CEO Sam Duncan said in a statement.

The company declined to make Duncan available for an interview.

In recent years, the venerable Twin Cities company has been besieged by competitors, particularly lower-priced food retailers like Target and Wal-Mart, while also weathering a weak economy. Analysts had been expecting job cuts after the sale of several chains to Cerberus Capital Management was announced in January, culminating months of high anxiety over Supervalu's future.

Altogether, Supervalu will cut an estimated 1,100 corporate positions — just over a third of its office workforce — including 575 in Eden Prairie and just under 25 at the Stillwater headquarters of Cub Foods, the Twin Cities' largest supermarket chain.

Supervalu's layoffs are spread over myriad white-collar job classes and also will hit the offices of Supervalu's other remaining chains, the largest of which are in St. Louis, Washington, D.C., and Virginia. Supervalu's Save-A-Lot chain, a national low-price operator that's expected to drive Supervalu's growth, was spared the layoff ax.

"We believe the new organization will be more efficient and nimble, which should better position the company in the increasingly competitive food retail space," Citigroup analyst Deborah Weinswig wrote in a research note on Tuesday.

The more than 5,000 store workers at Cub Foods, as well as store employees at Supervalu's other remaining supermarket chains, generally will not be affected by Tuesday's job-cut announcement. Neither will the 675 or so jobs at Supervalu's sprawling distribution center in Hopkins, said Mike Siemienas, a company spokesman. Supervalu has about 35,000 employees.

Supervalu is notifying most workers who are being laid off on Tuesday and Wednesday, Siemienas said. A relatively small number of cuts will come through the elimination of unfilled job openings.

The layoffs at the headquarters of Supervalu's remaining chains suggest that in addition to cuts due to the sale, Supervalu is trimming its workforce to reduce operating costs. The firm has had several rounds of cost-cutting before the sale to Cerberus, including the elimination of about 300 Twin Cities headquarters jobs over the past year.

The layoff unveiled on Tuesday marks one of the larger mass job cuts in Minnesota during the past two years, according to data from the state's Department of Employment and Economic Development.

In 2012, Best Buy laid off 680 workers at its headquarters and several shuttered stores, while General Mills pared 419 at its headquarters and Boston Scientific cut 500 jobs at plants in Arden Hills and Maple Grove. In 2011, the closure of the Ford assembly plant in St. Paul erased 810 jobs.

Supervalu ran into trouble after its $12 billion purchase of most of Albertsons Inc. in 2006. The deal turned Supervalu into one of the largest U.S. supermarket operators, its traditional wholesale food business eclipsed by retail.

But the deal saddled the company with a mound of debt, leaving it lagging in store improvements and the ability to cut prices to stay competitive.

Plagued with continuously falling sales and a plummeting stock price, Supervalu put itself up for sale in whole or in parts last July.

The deal with Cerberus undid the old Albertsons deal, leaving Supervalu once again a company that's half a retailer and half a food wholesaler. Yet it faces an even more challenging supermarket environment than before the Albertsons deal.

"They're still in deep trouble," said David Livingston, a Wisconsin-based supermarket researcher. "They might be a little meaner and leaner, but they are still facing the same challenges."

The company's shareholders, however, have had reason to cheer in recent months. Supervalu's stock bottomed at $1.73 in July and was crawling at around $1.85 in October, before popping to about $3.50 after the Cerberus deal was unveiled.

It closed Tuesday at $5.12, up 7 cents or 1.4 percent.

Star Tribune staff writer Steve Alexander contributed to this report.

Mike Hughlett • 612-673-7003