MINNEAPOLIS — Shares of Supervalu here tumbled nearly 15% yesterday after the retailer revised its sales and earnings outlook downward for the year and took a one-time, $1.6 billion goodwill and asset impairment charge to second-quarter results.
"Given the slower than anticipated economic recovery, we see a longer timeline for our corporate initiatives to gain traction," said Craig Herkert, president and chief executive officer, in a conference call with analysts.
The company cited competition from nontraditional food retailers and indirectly cited expanded grocery offerings at Minneapolis-based Target in reporting a 6.4% decline in same-store sales for the 12-week quarter, which ended Sept. 11, and in reducing its sales outlook for the year.
The loss for the period was $1.47 billion, but net income without the one-time charge and adjusted for other one-time charges primarily related to a labor dispute at a Shaw's warehouse, totaled $59 million. That compared with $74 million in the year-ago quarter. Sales for the quarter were down about 8.5%, to $8.66 billion, vs. year-ago results.
The company said it expects sales for the year to be about $38 billion, down from $40.6 billion last year. It reduced its projections for full-year same-store sales to negative 5.5%, down from previous projections of negative 5.0%, and lowered its earning guidance to a range of $1.40 to $1.60 per share, off from a previous forecast of at least $1.75.
"Supervalu's turnaround efforts may be in a more critical state than we envisioned previously," said Ajay Jain, an analyst at Hapoalim Securities, New York, in a research note in which he cited Supervalu's increasing gross margins and declining sales volumes. "The continued dependence on gross margin at the expense of top-line is an increasing liability for Supervalu as it cedes share to more price-focused retailers."
