NEW YORK — Supervalu expects to boost its comparable-store sales numbers from less than 1% to levels approaching the 3% to 5% range — closer to the performance of rivals Safeway and Kroger — as it improves execution and service at the store level, Supervalu's chairman and chief executive officer said at an investor conference here last week.
“Both Safeway and Kroger have been investing in their businesses for the past four or five years, and the [identical-store] sales they're getting show what can happen when you invest in store operations,” Jeff Noddle told the Bank of America 2007 Consumer Conference. “We expect that at some point our numbers should look like their numbers.”
Supervalu's ID sales were flat in the second quarter and up 0.6% in the third, with expectations of stronger results in the fourth quarter, he said. “Our goal is to see sequential improvements every quarter,” he explained.
“The ID numbers have improved beyond where we thought they would be at this point,” he added, “and while I'm not going to predict when our numbers will look like those of our competitors, we believe that as we raise the standards of execution, freshness and service at the Albertsons stores, we should see continued growth in those numbers.”
In terms of synergies, Noddle said Supervalu did not anticipate consolidating distribution in its Eastern division when it issued its initial synergy guidance last summer of $150 million to $175 million on a pretax basis at the end of the third year following the Albertsons acquisition last June.
“Our original projections were based on what was on the ground at that time,” he explained, “but we made the decision later to consolidate facilities in our Eastern region and to install the automated case-handling system” that the company had previously installed at its Hopkins, Minn., facility.
“That rollout will delay synergies somewhat in the Northeast, but it's the right decision for the long term,” he said.
In other remarks, Noddle said he believes the competitive threat posed by companies like Whole Foods will lessen as natural and organic foods move further into the mainstream. “More retailers are getting into those areas, and more manufacturers are offering organic versions of traditional items,” he noted.