News Watch 2006-12-18

AHOLD'S FOODSERVICE UNIT SUED FOR OVERCHARGES

AMSTERDAM — Two customers of Ahold's U.S. Foodservice division filed a class-action lawsuit alleging they were overcharged for items, but Ahold here said the suit was without merit, according to reports. The lawsuit cites a Connecticut hospital and a family-owned Italian restaurant in Rockford, Ill., claiming that U.S. Foodservice used a fraudulent supply system to overcharge customers by hundreds of millions of dollars between 2000 and 2003, the reports said. The claims are not related to the accounting scandal at U.S. Foodservice and its associated legal troubles. Separately, last week the former chief financial officer at U.S. Foodservice, Michael Resnick, was sentenced to six months' probation after pleading guilty to one count of fraud in the vendor-rebate accounting scandal. Also, Brady Schofield, who owns seafood and produce companies that supplied U.S. Foodservice, last week was sentenced to six months of home confinement after pleading guilty in June to insider trading and falsifying records.

SUPERVALU NARROWS OUTLOOK, DELISTS SECURITIES

MINNEAPOLIS — Supervalu here last week narrowed the range and increased the upper end of its earnings guidance for fiscal 2007, projecting net income of $2.32-$2.43 per share vs. previous guidance of $2.18-$2.41, after anticipated charges related to the Albertsons integration. Earnings are now expected to come in between $2.66 and $2.74 per share before adjustments, vs. previous projections of between $2.62 and $2.80 per share. The company also said it expects identical-store sales to be up “moderately” in the third quarter from the second quarter, when the company posted flat same-store sales results. Also last week, Supervalu said it would seek to delist and deregister securities of its New Albertsons subsidiary, created to facilitate the merger. The New York Stock Exchange is expected to cease trading of the units on Jan. 8.

PENN TRAFFIC PLANS TO CLOSE FOUR STORES, SELL ONE

SYRACUSE, N.Y. — Penn Traffic here last week said it would close two P&C Foods supermarkets and two stand-alone Quality Pharmacy stores by the end of the month. The company also reached an agreement to sell one Quality Markets supermarket location to an independent distribution customer. The P&C stores set for closure are located in Fairmount, N.Y., and Cicero, N.Y., and the pharmacies are located in Westfield, Pa., and Cambridge Springs, Pa., a Penn Traffic spokesman told SN. The Quality Market store to be sold to an independent distribution customer is in Corry, Pa.

DOLLAR GENERAL POSTS RESTRUCTURING-RELATED LOSS

GOODLETTSVILLE, Tenn. — Dollar General here last week reported a loss of $5.3 million during its fiscal third quarter ending Nov. 3, which it attributed to $79.2 million in charges related to planned store closures announced last month. Sales rose by 7.6% to $2.2 billion, with same-store sales increasing by 2%, the retailer added. Sales of “highly consumable” items, which include food, increased by 8.4%, officials said. Dollar General last month detailed a plan to close 400 money-losing stores and pare down inventories.

TESCO SAID TO SECURE TWO SMALL CALIFORNIA SITES

EL SEGUNDO, Calif. — Tesco's U.S. division here has secured two Southern California locations to open its small-format food stores next year, reports said last week. The British supermarket operator is planning one 14,000-square-foot location in a shopping center in Fullerton and another near a strip center in Laguna Hills. The company recently said it has scouted 300 potential locations for its stores, which it expects to begin opening next year. In a conference call with investors last week, Steve Burd, chairman, president and chief executive officer, Safeway, said his company was prepared to face the new competition. “We know their sites, and it's quite a mixture” of low- and high-income locations, he said.