Overall Supervalu Q1 sales up slightly, ponders Save-A-Lot spin off

MINNEAPOLIS - Supervalu on Tuesday reported first quarter fiscal 2016 net sales of $5.4 billion, representing a sales increase of 2.7%. Retail Food segment identical store sales were negative 0.3%. 

 

"We delivered sales increases across all three business segments and managed our costs very well in this first quarter," stated Sam Duncan, Supervalu president and CEO. "I'm pleased with our bottom line and ability to manage to these results in spite of softer sales at Save-A-Lot and in our Retail Food stores."

 

First quarter Retail Food net sales totaled $1.5 billion, representing an increase of 3%. The sales increase reflects the impact of new store openings partially offset by negative identical store sales.

 

First quarter Save-A-Lot net sales totaled $1.4 billion, an increase of 3.8%. The sales increase reflects the impact of new store openings and the slight uptick in same-store sales.  Save-A-Lot network identical store sales were positive 0.6%. Identical-store sales for corporate stores within the Save-A-Lot network were positive 2.8%. 

 

However, that $1.4 billion in quarterly revenue may not be included Supervalu results for long. In addition to announcing its quarterly results, Supervalu noted that the company is actively exploring spinning off its Save-A-Lot business in a stand-alone, puplic company.

 

“Save-A-Lot is a leading national hard discount retailer with over 1,300 total stores, comprised of approximately 430 corporate stores and approximately 900 stores operated by licensee owners, and we believe Save-A-Lot has significant growth potential," Duncan said. "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,” he said. “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.”

 

No specific timetable for a separation has been set, the company noted. 

 

Supervalu has engaged Barclays and Greenhill to serve as financial advisors, and Wachtell, Lipton, Rosen and Katz as legal advisor, in connection with this possible separation.