Supervalu commits to fixing retail banners, reports positive IDs for Save-A-Lot

MINNEAPOLIS — While Save-A-Lot is still the jewel in the crown of Supervalu, the chain has committed to investing into its retail supermarket banners with a makeover for all of the banners, a review of the planograms within those banners and private label. 

"We will launch shortly rebranding campaigns in all of our retail banners, where our customer messaging has been disjointed and oftentimes confusing," Sam Duncan, Supervalu president and CEO, told analysts Thursday morning. "When complete, these banners will have a much more clearly defined identity, which we will be communicating across all platforms, including in-store signage, weekly ads, customer emails, mobile devices and banner web pages."

For an example as to how Supervalu will be rebranding its respective banners, Duncan directed analysts to the Shop'n Save web site. 

There's much work to be done in turing around the supermarket banners, Duncan acknowledged. "In some of our banners, the store layouts are still [reflective of] the 80s and 90s where center store was more of a focus," he said. "We are going to focus on fixing the sales of that retail side of our company."

A review of the company's planograms revealed some categories in which Supervalu was not well represented. "As our merchandising teams have reviewed our category sets and space allocation, it became quite clear that we have a number of areas where we do not have enough linear feet devoted to the assortment, meaning key items are missing from our shelves," Duncan said. "Two categories we are addressing now are pet and baby." 

And the continued improvement in private label penetration also will be a focus going forward. "We are running ahead of our internal sales penetration goals," Duncan said. "Our private brand sales penetration has increased 75 basis points on a year-to-date basis compared to last year. And we know we still have a significant opportunity in front of us," he said.

"This past year has been about reorganizing and [navigating] new directions for our company, stabilizing and decentralizing," Duncan said. "We had to establish a new management team, not only in part of our retail banners but also our head office," he said. "We still have to work to do on the retail banners. We just recently got the org charts filled. … This will be a multi-year project."

Supervalu reported third quarter fiscal 2014 net sales of $4 billion, representing a decrease of 1%, and net earnings of $31 million, or $0.12 per diluted share. 

Identical store sales in the Retail Food segment were negative 1.9%. Third quarter Retail Food net sales were $1.1 billion, a decline of 2.6%.

Retail Food operating earnings in the third quarter were $24 million, or 2.2% of net sales, and included $1 million in pre-tax income related to a reduction of previously accrued severance costs. When adjusted for this item, Retail Food operating earnings in the third quarter were $23 million, or 2.2 percent of net sales. 

Third quarter Save-A-Lot net sales were $991 million, an increase of 2.6%, reflecting the impact from network identical store sales of positive 1.7%. Identical store sales for corporate stores within the Save-A-Lot network were positive 5.4%.