Supervalu Profit Rises 50%

By Tess Stynes 

Supervalu Inc. said its earnings rose 50% in its latest quarter, led by continued sales growth at its Save-A-Lot discount chain, as well as a boost from an additional week of sales.

The Eden Prairie, Minn., company said Save-A-Lot network sales at operations open at least four full quarters improved for a sixth straight quarter, posting an increase of 3.6%.

Supervalu--which owns supermarket chains including Cub, Fresh Farm and Shop n' Save--also reported that retail food sales at stores open at least four full quarters rose 1.1%, marking a fifth consecutive quarter of growth.

Like other supermarket operators, Supervalu is facing increased competition from a wide range of rivals including warehouse clubs, major retailers such as Wal-Mart Stores Inc. and dollar stores.

However, Moody's Investors Service said Monday in a report on the sector said it expects that revenue losses by traditional supermarket companies to alternative food retailers is slowing and will reach "very modest levels over the next couple of years." Moody's noted that extreme-value discount concepts, including Supervalu's Save-A-Lot chain, will continue to grow as cost-conscious consumers seek out bargains.

For the period ended Feb. 28, Supervalu reported a profit of $39 million, or 14 cents a share, up from $26 million, or 10 cents a share, a year earlier. The latest period included a benefit of three cents a share owing to an additional week. Excluding refinancing, benefit plan and store closure expenses and other items, earnings from continuing operations were 24 cents.

Revenue increased 10% to $4.36 billion. Excluding the additional week, sales rose 2.5%.

Analysts polled by Thomson Reuters expected per-share profit of 21 cents and revenue of $4.39 billion.

Write to Tess Stynes at [e-mail]

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