Back to top

Analyst Blog

Supervalu Inc. (SVU - Analyst Report) posted adjusted earnings per share of 13 cents for the second quarter of fiscal 2014 ended Sep 7, 2013, beating the Zacks Consensus Estimate of 11 cents per share by 18.2%. The results were much better than the loss of 9 cents suffered by the company in the comparable prior-year quarter.

Adjusted earnings exclude an after-tax income of $9 million and an after tax charge of $3 million related to legal settlement.

The better-than-expected results were due to higher gross earnings following effective cost-reduction initiatives.  

Revenues and Margins

Supervalu’s total sales rose 0.2% year over year to $4.0 billion as positive identical store sales at the corporate Save-a-Lot network was offset by negative identical store sales in the network retail food segment. Sales beat the Zacks Consensus Estimate of $3.8 billion.

Gross margin inflated 120 basis points (bps) to 14.6% in the quarter on the back of higher fees earned under the transition services agreements (TSA) compared with last year.

During the second quarter, SVU received $62 million under the TSA compared to $10 million last year, due to higher number of stores and distribution centers covered under the agreements.

Segment Details

Net sales at Retail Food declined 1.1% to $1.07 billion in the second quarter of fiscal 2014 from $1.09 billion in the prior-year quarter. Results were affected by a same-store sales decline of 0.9% due to aggressive pricing by its peers and incremental price investments by Supervalu. Operating margin in the segment shrank 40 bps to 0.7% in the reported quarter due to incremental investment in pricing and store remodeling.

Net sales at Save-A-Lot were almost flat at $972 million compared with $973 million in the year-ago quarter. The decline was due to negative identical store sales in the Save-A-Lot network of 0.3%. However, identical store sales for corporate stores within the Save-A-Lot network were positive 4.6%.. Save-A-Lot's operating margin shrank 20 bps to 3.3% of sales as cost reduction initiatives were offset by incremental price investments.

Net sales at the Independent business declined 1.6% year over year to $1.84 billion in the quarter from $1.87 billion a year ago. Lower sales to existing customers hurt sales in this segment. The Independent business’ operating margin, however, inflated 110 bps to 3.9% during the quarter backed by higher gross margins and lower operating cost.

Other Financial Update

Cash and cash equivalents of Supervalu were $81.0 million as of Sep 7, 2013, versus $76.0 million as of Jun 15, 2013. Long-term debt and capital lease obligations remained flat at $2.9 billion as of Sep 7, 2013, compared with the previous quarter.

Other Stocks to Consider

Supervalu currently carries a Zacks Rank # 3 (Hold). Other stocks in the retail sector worth considering include Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report), Tree House Foods Inc. (THS - Snapshot Report) and DiamondFoods Inc. (DMND - Analyst Report), all carrying  a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%