Supervalu Inc. ( SVU - Analyst Report ) is slated to release its fourth quarter 2012 results before the opening bell on April 10, 2012. The Zacks Consensus Estimate for the fourth quarter is pegged at 35 cents (year-over-year decline of 20.10%) on revenues of $8,320 million.

The Zacks Consensus Estimate for the fiscal year 2012 is $1.23 (year-over-year decline of 11.87%) on revenues of $36,213 million.

Third Quarter Recap

Supervalu Inc.’s earnings per share (EPS) of 24 cents shot up 125.5% compared to a loss of 94 cents posted in the year-ago period. The quarterly earnings were in line with the Zacks Consensus Estimate.

Total sales dipped 3.98% to $8,327 million in the quarter, compared with $8,673 million in the prior-year period. The reported revenue missed the Zacks Consensus Estimate of $8,429 million.

Agreement of Estimate Revisions

Over the past 30 days, one analyst among the 13 analysts covering Supervalu revised its estimate downward. As a result, quarterly estimate dropped by one cent during the last 30 days.

For the fiscal 2012, although one analyst revised his estimates downward for the last 30 days, the quarterly estimate did not change during the period.

Surprise History

Supervalu has surpassed earnings estimates in all the last four quarters. The earnings surprise range from a low of0.00% to a high of 40.00%, with the average earnings surprise being 25.16%.

Our Recommendation

We feel that the grocery chain along with its peers in the industry is facing tough times as the global economy slows down accompanied by low disposable income of consumers forcing them to spend cautiously. Target Corp.'s ( TGT - Analyst Report ) shift to self-distribution along with the sale of its supply chain management subsidiary will affect sales in the coming quarters.

Moreover, the Food and Drug Administration (FDA) is increasingly becoming more and more vigilant regarding food and health standards. Adverse publicity regarding food and drugs is affecting consumer confidence and preventing them from buying the company’s products resulting in product and delivery disruptions.

Supervalu operates in a highly competitive market. Moreover, labor unions pose inherent risks for the company and potential labor related issues remain a concern. Supervalu faces stiff competition from Wal-Mart Stores Inc. ( WMT - Analyst Report ) , The Kroger Co. ( KR - Analyst Report ) and Safeway Inc. ( SWY - Analyst Report ) .

Currently, we have a Neutral recommendation on the stock. Further, Supervalu holds the Zacks #4 Rank, which translates into a short-term Sell rating.