Supervalu Profits Beat Street Despite Loss

The decline in restaurant business helped supermarket operator Supervalu(SVU Quote) beat Wall Street expectations in the fourth quarter, despite posting a loss.

Shares soared 13% to $16.97 in afternoon trading after the company reported a loss of $201 million, or 95 cents a share, compared with a profit of $156 million, or 73 cents a share, last year. Results included charges of $1.17 per share to write down the value of some assets and 58 cents for store closures, as well as settlement costs of 7 cents.

Excluding charges, the company earned 87 cents a share. Analysts expected earnings of 79 cents.

According to Wednesday's Nielsen Global Consumer Confidence Index, 45% of respondents have cut down on takeout meals, turning the grocery industry into one of the strongest in the retail sector during the recession.

But competition between chains and discounters has left shoppers seeking out the best deal. According to the same survey 41% have switched to less expensive groceries and 20% said they will continue to look for cheaper items, even when the economy improves.

As a result, Supervalu, which owns chains Albertsons, Jewel-Osco and Sav-A-Lot, has made an effort to drive home the message of value through increased promotional activity. It has also placed greater focus on store-brand items that are lower priced than brand-name.