MERRILL LYNCH RETAILING LEADERS CONFERENCE

ELLIOT ZWIEBACH

NEW YORK - Supervalu is confident it can avoid integration problems at Albertsons because of the local expertise of the division management it is acquiring, Jeff Noddle, chairman and chief executive officer, told an investors conference here last week.

"The fact we don't have overlap in the operating divisions gives us a lot of confidence," he said. "And while you hear about companies losing focus and taking their eye off the ball in these kinds of transactions, we believe that, given the strength of the Albertsons division management and our management, we can keep people focused on the customer."

Speaking at the Merrill Lynch Retailing Leaders conference here, Noddle said he had met over the previous 10 days with the leadership in all of the Albertsons divisions Supervalu is scheduled to acquire, "and we feel very strongly about their local expertise and the value of that in the food business, and they are very anxious to be a part of it."

He said he believes food marketing must be "very local. That doesn't mean you don't use the size and scale of a large company, but food is a very local, very regional business, and preferences are driven by ethnic backgrounds and the brands people were used to when they grew up."

Asked which Albertsons divisions might need capital infusions, Noddle said, "We think the Jewel operation in Chicago is fairly up to date and a pretty modern fleet. Acme had been undercapitalized for a long time, but since Albertsons acquired it from American Stores, it has brought a portion of it up to date, though we think there is more to do there.

"We also think there may be a higher opportunity at Shaw's and Star Markets in New England for remodeling opportunities, though you can't replicate those locations.

"In Southern California, there is an interesting mix of stores. You have the former Lucky Stores, which are smaller, though the stores in Orange County and San Diego County are very modern and up to date.

"The stores in the Intermountain region are also pretty modern, but we need to take a look at stores in Washington and Oregon to determine what we need to do up there where their shares are a little lower."

Noddle said he expects the acquisition to close in early June.