NORFOLK, Va. -- Supervalu confirmed its commitment to Farm Fresh and Shoppers Food Warehouse, its two primary retail brands in the Mid-Atlantic region, as it held its annual meeting here last month.
Farm Fresh operates 36 conventional stores in Virginia, and Shoppers has 58 price-impact stores in Virginia, Washington, D.C., and Baltimore.
Jeff Noddle, chairman and chief executive officer, Supervalu, said the company plans to open three new Farm Fresh stores this year, including one on the ground floor of a luxury high-rise condominium development.
"Farm Fresh exemplifies our investment in and dedication to regional expertise," he told shareholders. "As a premier high-value operator, Farm Fresh knows its customers better than anyone else, making it a customer destination."
Shoppers Food Warehouse expanded into Baltimore last year with the conversion and remodeling of 16 stores, and although Noddle did not indicate specific growth plans for Shoppers in fiscal 2005, "this [region] promises to be a very successful and growing retail market for us," he said.
Supervalu services 246 independent stores out of its primary distribution center in the region -- the former Richfoods facility in Mechanicsville, Va. -- including 18 corporate Save-A-Lot stores in addition to Farm Fresh and Shoppers locations, Noddle pointed out.
He said the company intends to continue to invest heavily in growing the Save-A-Lot limited-assortment format nationally, with plans to focus expansion "within our present geographic markets and judicious expansion into new markets."
Supervalu also plans to open 110 to 140 hybrid Save-A-Lot units that include a full general merchandise assortment and to convert approximately 40 to 50 existing stores to the combination format, Noddle said. Supervalu operates 199 hybrid Save-A-Lot stores that incorporate full general merchandise offerings from its Deal$-Nothing Over a Dollar stores, he pointed out.
Other retail expansion plans, Noddle said, including adding four more Cub Foods locations in the Minneapolis-St. Paul marketplace, compared with four new stores and seven remodels last year, to bring the total of Cubs in the Twin Cities to 50.
Corporate retail at Supervalu last year accounted for 52% of sales and 67% of operating profits, with the balance of sales and profits coming from its wholesale division, Noddle said.
He said the wholesale side of the business benefited last year from the bankruptcy of Dallas-based Fleming, its key competitor, "which created a unique opportunity for us to add volume."
After C&S Wholesale Grocers, Brattleboro, Vt., acquired most of Fleming's assets, it did an asset exchange with Supervalu in which Supervalu exchanged what Noddle termed its "low-return assets" in New England for more profitable new business within its existing network. "While top-line sales were negatively impacted, the asset swap generated improved leverage from the concentration of volume growth in existing facilities, which contributed to our financial progress this year," he explained.
Noddle listed other advances last year in Supervalu's logistics business, including the following:
The opening of a dedicated facility in Fort Worth, Texas, to support the operations of SuperTarget stores in the Southwest. Noddle said Supervalu supplies 118 SuperTarget stores nationwide.
The addition of a third Kroger warehouse for Supervalu to manage. "We now manage approximately 2 million square feet of Kroger warehouse space in Colorado, Arizona and Michigan, and we have lowered Kroger's warehouse costs at these locations for six straight years," Noddle declared.
The decision by Atkins Nutritionals to have Supervalu manage warehouses in Denver and Atlanta "to enhance their supply-chain efficiency as they experience rapid growth for their low-carb products."
"Our diligent efforts to rationalize our distribution network to improve capacity utilization rates, implement 'best in class' efficiency programs and expand our non-asset-based logistics platform remain an excellent formula to support a mature business model with strong cash-flow characteristics," Noddle said.
