Supervalu returns to 4th-quarter profit on fewer charges, cost-control efforts

Supervalu moves to 4Q profit on cost cuts

EDEN PRAIRIE, Minn. — Cost cuts helped grocer Supervalu Inc. return to a fiscal fourth-quarter profit. But the operator of Albertsons, Save-A-Lot and other stores gave a 2011 earnings outlook below analysts’ estimates.

Supervalu’s shares fell 76 cents, or 4.4 percent, to $16.38 in premarket trading.

Supervalu is in the midst of a turnaround effort. When the recession hit, the grocer struggled, as it was slow to respond to shoppers’ new demands and sharpening price competition.

Since then it has brought in new leadership, cut costs and focused on lower prices and its discount Save-A-Lot stores.

Supervalu earned $97 million, or 46 cents per share, during the fourth quarter. Excluding 16 cents per share in charges related to store closings and other items, profit was 62 cents per share. That tops the estimates of analysts polled by Thomson Reuters by a penny. These estimates generally exclude one-time items.

A year ago the grocer reported a loss of $201 million, or 95 cents per share. That included $1.82 per share in goodwill and impairment charges, as well as other items.

Revenue for the period ended Feb. 27 fell 15 percent to $9.21 billion. Last year’s fourth quarter included an extra week, which boosted sales by about $800 million and added 6 cents per share to its results.

Sales at stores open at least a year slipped 6.8 percent during the quarter, hurt by increased competition, deflation and soft economic conditions. This figure is a key indicator of a retailer’s health because it measures results at existing stores rather than newly opened ones.

But Supervalu managed to somewhat offset its weak revenue by lowering its fourth-quarter selling and administrative expenses to $1.9 billion from $2.3 billion. The company based in Eden Prairie, Minn. also reduced its total retail square footage by 6.2 percent to approximately 65 million by closing underperforming stores.

For the year, the grocer posted a profit of $393 million, or $1.85 per share. It reported a loss of $2.86 billion, or $13.51 per share, in the previous year. Adjusted earnings were $2.03 per share.

Annual revenue declined to $40.6 billion from $44.56 billion.

Supervalu predicts 2011 earnings of $1.65 to $1.85 per share. This includes charges of about 10 cents per share, mostly related to exiting the Connecticut and Cincinnati markets during the first quarter. Analysts predict a bigger profit of $1.96 per share for the year.

Supervalu has about 4,290 stores in the U.S.