Supervalu Swings to Q2 Profit

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MINNEAPOLIS — Citing improvements in traffic and same-store sales trends — although both were still negative — Supervalu here on Wednesday posted better-than-expected net income of $60 million for the second quarter, compared with a loss of $1.47 billion in the year-ago period.

"I am pleased with the progress we are making," said Craig Herkert, president and chief executive officer, in a conference call with analysts. "We are transforming our retail operations through hyper-local retailing, rolling out new engaging marketing programs and delivering on key initiatives such as lowering shrink and running more effective promotions."

In particular, he cited success from game-themed promotions that the company tested this summer in two regions — Albertsons in the Intermountain West and Acme in Philadelphia — that will be rolled out to three additional areas this fall. In addition, the company rolled out more price-themed promotions such as 10-for-$10 deals and others (see video below).

Still, same-store sales for the quarter, which ended Sept. 10, were down 1.8% for the quarter, and total revenues fell 2.6%, to $8.4 billion. Basket size increased 200 basis points on a year-over-year basis, driven by product-cost inflation of 4.5%, partially offset by a 2.5% decrease in the average number of items per transaction. Same-store customer counts were down 3.8% compared with the year-ago second quarter.

Through the first half, net income totaled $134 million on sales of $19.5 billion, vs. a loss of $1.4 billion in the year-ago span on sales of $20.2 billion.

Herkert cited new promotions like Cub Foods' "Plenty for Twenty" commercials for helping stem sales erosion at the company:

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