Supervalu’s wholesale and retail divisions continued down two very different paths this spring.
The Eden Prairie-based grocery company said Tuesday its profit from ongoing operations grew 9 percent to $24 million, or 9 cents a share, in the three months ended June 17.
Revenue rose 6.4 percent to $4 billion in the period, the first quarter of its new fiscal year. Both figures were better than analysts expected and the company’s stock rose 15 percent.
Supervalu’s shining star, the wholesale division, saw a healthy increase in sales of more than 12 percent compared to a year ago, due mostly to new customers and increased sales to new stores of existing customers. By contrast, same-store sales in the retail division, which includes Cub Foods and four other brands, declined 4.9 percent.
“The results generated this quarter by our wholesale business were outstanding and demonstrate our ability to deliver on our strategy and commitment toward growing this segment,” Chief Executive Mark Gross said.
The company’s $375 million acquisition of Unified Grocers, a Los Angeles-area food distributor, closed at the end of the first quarter and will begin to contribute to Supervalu’s wholesale unit in the current period.
For Supervalu’s retail division, the latest results marked the ninth consecutive quarterly decline. In April, the company announced that it would start marketing some of its stores, although it did not specify which ones.
In a conference call with analysts Tuesday, Gross did not mention that, however. Instead, he reiterated previous statements that the retail stores serve as a good testing lab for the wholesale division. But he added a caveat: “We expect our assets to perform to maximum shareholder value.”
The upheaval in retail grocery has uprooted several Supervalu executives. Bruce Besanko, the company’s chief financial officer, stepped down earlier this month to become CFO at Kohl’s. In 2016, Sam Duncan, Besanko’s former colleague at OfficeMax, stepped down as CEO and was succeeded by Gross. Eric Hymas, president of Cub Foods, departed in February.
The stock bounce on Tuesday marked another moment of volatility for the company’s investors. Supervalu shares are down about 22 percent from their year-ago level and about 50 percent below their best level of the past year. The company recently announced a 1-for-7 reverse stock split effective Aug. 1. A reverse split is generally seen as a step to prevent a low-priced stock from being delisted from its stock exchange.