SuperValu considering Save-A-Lot sale

by Monica Watrous
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SuperValu Inc. is pursuing a potential separation of its Save-A-Lot business.
SuperValu Inc. is pursuing a potential separation of its Save-A-Lot business.

MINNEAPOLIS — SuperValu Inc. is pursuing a potential separation of its Save-A-Lot business into a stand-alone, publicly traded company. A leading national hard-discount retailer, Save-A-Lot has more than 1,300 stores, including approximately 430 corporate stores and approximately 900 operated by licensed owners.

“Over the last two-and-a-half years, Save-A-Lot has repositioned its brand, refocused its efforts on fresh produce and meat, and remerchandised its stores and product offerings to better appeal to a broader group of customers,” said Sam Duncan, president and CEO of SuperValu. “Today’s announcement reflects our commitment to continuing to explore ways to maximize value for our shareholders. We believe a separation of our Save-A-Lot business could allow Save-A-Lot, our independent business and our retail food banners to better focus on their respective operations, and pursue strategies specific to their business characteristics and growth potentials, for the benefit of our shareholders, customers, licensees and employees.”

SuperValu has not set a specific timetable for a separation of St. Louis-based Save-A-Lot, nor has it assured a separation will be completed or that any other change in the company’s overall structure or business model will occur.

With annual sales of approximately $18 billion, Minneapolis-based SuperValu is one of the largest grocery wholesalers and retailers in the United States with a network of 3,597 stores, including 1,857 stores serviced by the company’s food distribution business, 1,335 Save-A-Lot stores, and 197 traditional retail grocery stores.

The company released its first-quarter earnings results in conjunction with the announcement. For the period ended June 20, SuperValu reported net earnings from continuing operations of $63 million, equal to 23 cents per share on the common stock, up 31 percent from $48 million, or 18 cents per share, in the year-ago period. Excluding $2 million in after-tax structural and tax planning fees, first-quarter net earnings from continuing operations was $65 million. Net sales increased 2.7 percent to $5.407 billion from $5.264 billion the year before.

Save-A-Lot had net sales of $1.41 billion during the quarter, up 3.8 percent from $1.36 billion the year before, and operating earnings of $51 million, up from $46 million for the comparable quarter as a result of higher base margins and lower logistics costs, offset in part by higher occupancy and employee-related costs driven by new store growth.

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