Supervalu Stock Plunges After Earnings Report

ELLIOT ZWIEBACH

MINNEAPOLIS — Supervalu’s stock plunged nearly 16% in yesterday’s trading after the company here said it reduced its earnings and sales-growth targets and said it would take longer than expected to realize the benefits of the Albertsons acquisition. The company said a “cautious consumer” and the difficulties in managing inflation have led it to reduce its quarterly same-store sales and yearly earning targets. Also, the company now expects to realize the full measure of its post-acquisition synergies in fiscal 2010 — about six months later than its original target — though the anticipated pre-tax savings of $150 million to $175 million will be the same. "Otherwise, we think we are exactly on the timeframe we laid out," Jeff Noddle, chairman and chief executive officer, told analysts during a conference call to discuss financial results for the third quarter that ended Dec. 1. For the 12-week third quarter, Supervalu reported earnings of $141 million, up 24.8% from the prior year, while sales fell 4.2% to $10.2 billion — a result the company attributed in part to one less week of operating results from the acquired properties than the year earlier. Identical-store sales rose 0.5%. Net income for the year to date rose 31.6% to $437 million, while sales rose 24.2% to $33.7 billion. Noddle said Supervalu anticipates ID sales will remain in the range of 0.5% to 1% during the fourth quarter, down from previous estimates of 1% to 2% gains. He also lowered the earnings outlook for the year to $2.71 to $2.77 from $2.73 to $2.83 previously. Supervalu said it expects to spend $1.3 billion on capital investments next year — the same amount as in fiscal 2008 — to remodel 165 stores and to open 15 new conventional-size supermarkets and 55 to 65 limited assortment stores.

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