Following sale, Supervalu's remaining businesses will be 'in great shape' CEO says

MINNEAPOLIS — The sale of 877 stores to Cerberus Capital Management will help Supervalu re-energize its remaining three businesses, current Supervalu president and CEO Wayne Sales told analysts Thursday morning. "What this means … is the company is smaller," Sales said. "And we exit with a much smaller balance sheet to ensure liquidity going forward," he said. This sale will not be followed by any further divestitures, Sales said. "We're not shopping any other assets."

Most important, Sales said, it provides for some stability to the company's wholesaler business. "When you take Supervalu apart and you look at the most recent results … it provided some uncertainty to independent grocers," Sales said. The improved liquidity should settle those uncertainties. Save-A-Lot is still the jewel in the crown for Supervalu, perhaps more so now than before. "That will be a huge growth opportunity for us," Sales said. The company will focus on simplifying operations across Save-A-Lot and improving its private label mix from 57% to 70%, Sales said. 

And that leaves Supervalu in a better competitive position, Sales suggested. "The retail stores themselves are in great shape," he said. "[Across our] distribution centers, we have significant capacity to support our growth, [and] we see growth capital being placed in [our Save-A-Lot] businesses."

While the focus of Thursday's conference call focused on the particulars of the transaction, Supervalu did report third quarter fiscal 2013 net sales of $7.9 billion, down 5% as compared to the year-ago period. The decrease in net sales primarily reflected a decline in identical store sales of 4.5% across the company's retail food operations Retail Food and a same-store sales decline of 4.1% across its Save-A-Lot network. 

Third quarter retail food net sales were $5 billion, a decline of 7.4%, primarily reflecting an identical store sales decline of 4.5% and the disposition of a majority of the company’s retail fuel centers, which contributed $112 million in sales in the third quarter of fiscal 2012.

Third quarter Save-A-Lot net sales totaled $966 million, a decrease of 1.6%, reflecting the impact from network identical store sales of negative 4.1% and recently announced store closures partially offset by the benefit from 20 net new stores being operated at the end of the third quarter of fiscal 2013.

And Supervalu's independent business wholesaler net sales were relatively flat at $2 billion for the third quarter.