Supervalu to Sell 36 Stores to AFS

MARK HAMSTRA

MINNEAPOLIS — Supervalu here said yesterday that it has agreed to sell 36 Albertsons stores in Utah to Associated Food Stores, the Salt Lake City-based cooperative.

The specific terms were not disclosed, but Supervalu said it expected to record $150 million in after-tax proceeds from the sale. The deal — the first major divestiture since Craig Herkert took over as chief executive officer of Supervalu in May — is expected to be completed by this fall.

In addition, Supervalu said it was seeking buyers for four additional stores in Utah, and it will continue to operate those locations while it seeks a buyer. Supervalu is retaining three Utah stores in the St. George area and is also keeping its distribution center in the state.

In a conference call with analysts, Herkert said the 36 Utah stores were profitable, and the decision to sell them was more related to their market share. He said he would have a more complete outlook on his vision for the company when Supervalu reports second-quarter results in October.

Herkert also said he believes Supervalu needs to move toward more of an EDLP positioning in its conventional stores.

AFS said it has named Dick King — a former president at Albertsons and currently senior vice president at AFS — to be president of the new group of stores, which will be renamed. AFS currently operates 22 stores, and supplies more than 500.

Separately, Supervalu also reported a 30% drop in net income for the first quarter, which ended June 20, to $113 million, on a 4.7% decline in sales, to $12.7 billion. Same-store sales fell 3.2%.

Read More of Today's Headlines