MINNEAPOLIS — Supervalu here last week said it believes it finally has the “right tools and processes” in place to begin to stanch the negative trends in its financial results.
In reporting results for the most recent fiscal year last week, the company projected results for the current year that exceeded analysts' expectations.
Asked by an analyst what had changed about the company's strategic plan to drive the increased optimism, Craig Herkert, president and chief executive officer, said the company was sticking to its same strategic focus, but with the benefit of two years of effort and more resources behind it going forward.
“I think this is the same plan only with detail and meat on the bone,” he said. “I would argue that this is the plan we've been articulating for several years. The ‘aha’ to me is that the best plans in the world are not going to be effective if you don't have the tools and processes in place to enable your people to execute against it.
“We've got great people in our company and I think we've had the right plan. We did not provide them with the right tools and processes to go ahead and get after it. Today we have that, and that's the big difference. That's the big ‘aha.’”
The company's stock was up more than 17% on the day of the earnings announcement, as investors appeared to be encouraged by the outlook, after shares had been beaten down during the last two years amid persistently negative sales trends.
The results were still relatively week for the most recent period, although Herkert said trends in the first quarter were putting the company on track to meet its improved outlook of negative 1.5% to negative 2.5% comparable-store sales for the current year, following negative comps of 6% last year.
Supervalu reported net income of $95 million for the fourth quarter, which ended Feb. 26, on sales of $8.66 billion — declines of 2.1% and 5.9%, respectively, from year-ago results. Same-store sales for the quarter fell 5%, weighed down by the Northeast chains, which include Shaw's and Acme. Comps fell 3.5% excluding the Northeast, the company said, noting that Jewel-Osco in Chicago was also “below average.”
For the full year Supervalu posted a loss of $1.51 billion, following several one-time charges for asset goodwill write-down, store closures and other charges. Excluding one-time charges and extraordinary gains, the company said net income would have been $296 million. That compares with Net income of $393 million in the preceding year.
Sales for the full year were 37.5 billion, down 7.6% from a year ago.
Supervalu's projections for the current year included earnings in the range of $1.20 to $1.40 per share, and sales of $37.5 billion. Analysts has expected earnings to be at the low end of that range.