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Supervalu Inc. (SVU - Analyst Report), one of the largest grocery chains in the US, recently announced the launch of two new flavors of Stoneridge Creamery ice cream, namely Cinnamon Snickerdoodle and Peppermint Cookies ‘n Cream. These will be available in its retail stores for the next six months.

The limited edition Cinnamon Snickerdoodle is a swirl of cinnamon flavored ice cream with Snickerdoodle Cookie. On the other hand, Peppermint Cookies ‘n Cream is a swirl with pieces of real peppermint at the base of Cookies ‘n Cream ice cream.

Stoneridge Creamery is a popular ice cream brand and its summer edition of Strawberry Lemonade and Harvest Peach had been much appreciated by customers.

Product innovation plays a huge role in the company’s success. The introduction of new flavors is expected to contribute to Supervalu’s revenue. Another set of new flavors of Stoneridge Creamery ice cream is expected to be introduced in spring 2013.

A peer of Marks & Spencer Group PLC (MAKSY), Supervalu Inc. has been generating weak results for the past few quarters. The weak results were due to disappointing sales in most of the segments. Lower customer spending due to ongoing economic challenges, aggressive pricing by its competitors and weak identical stores sales resulted in the decline in sales. Further, global economic slowdown and increasing restrictions by the US Food and Drug Administration (FDA) regarding food and health standards are concerns.   However, the company has embarked on several initiatives that will help it to maintain financial flexibility, price its goods at par with its competitors, as well as reduce costs in fiscal 2013.

Supervalu Inc. carries a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. Longer-term, we are maintaining our Neutral recommendation on Supervalu Inc.

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