MERGERS AND INTEGRATIONS 1999-02-22 (6)

MICHAEL HARRISON

Supervalu Stresses Growth

Supervalu, Minneapolis, will grow its retail and food distribution business through acquisitions and new store openings, said Michael Wright, president, chairman and chief executive officer.

"Food distribution is a huge market and remains highly fragmented. This fragmentation translates into opportunities to gain market share through acquisitions," Wright said.

"I believe we're well-positioned for growth, which we will achieve if we focus on our key strengths," he added. Wright, who said the company achieved "record sales" of $17.2 billion last year, defined those strengths as maintaining a price leadership position in the Midwest, the growth of its licensed Save-A-Lot stores, a strong private label and more efficient distribution methods.

The company acquired 55 stores last year in the Twin Cities, Philadelphia and Pittsburgh markets "and we expect this trend to continue," Wright said.

According to Wright, "We think there are a number of good opportunities for us. We have the ability to leverage up and make significant acquisitions if the right opportunity came along. We have the flexibility in the balance sheet."

The Save-A-Lot limited-assortment format "is our fastest-growing business," Wright said. "We expect part of our future growth will come from our distribution customer base because Save-A-Lot represents an attractive opportunity for our independent retailers. They can successfully operate more than one banner in the same market, with each one targeting a distinct customer segment."

Averaging 15,000 square feet and featuring private-brand products priced "25% to 40% below private brands in conventional stores," the franchise will grow by an estimated 101 stores in fiscal 1999, Wright said, for "a total of 785 by year-end."

The company, Wright said, is working on "reducing costs by sharing best practices across all our concepts. We're focusing on labor scheduling and shrink reduction." He predicted "strong future sales growth by investing in price, thereby making our stores even more competitive."

On the distribution side -- that segment of Supervalu includes 34 facilities that service more than 4,400 stores in 48 states -- Wright mentioned several examples of "how we're pulling costs out of the supply chain." That includes a computerized routing system, "third-party transportation in selected locations" and the anticipated opening this summer of "a new, fast-moving distribution center," for the company's Northern region.

Those savings, he said, dovetail with "our focus on helping existing customers grow."