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SUPERVALU Announces Third Quarter Fiscal 2013 Results

Stocks in this article: SVU

Independent Business

Third quarter Independent Business net sales were $1.99 billion compared to $1.99 billion last year.

Independent Business operating earnings in the third quarter were $49 million, or 2.5 percent of net sales, compared to $66 million, or 3.3 percent of net sales last year. The decline in Independent Business operating earnings as a percent of net sales was primarily attributable to gross margin investment.

Cash flows

Third quarter net cash flows used in operating activities were $57 million compared to $61 million last year, reflecting the Company’s historically higher inventory levels at the end of the third quarter. Fourth quarter operating cash flows historically reflect the inventory reduction associated with the holiday selling season. Third quarter cash flows used in investing activities were $52 million compared to $82 million last year, reflecting lower payments for capital expenditures. Third quarter cash flows from financing activities were $117 million compared to $124 million last year.

Year-to-date net cash flows from operating activities were $357 million compared to $518 million in the prior year. Year-to-date net cash flows used in investing activities were $360 million compared to $285 million last year, reflecting lower proceeds from asset sales and higher payments for capital expenditures. Year-to-date cash flows from financing activities were $1 million compared to a use of $209 million last year, reflecting a higher level of debt reduction in the prior year.

Outlook

The Company currently expects debt reduction for fiscal 2013 to be approximately $400 million. Cash capital spending is projected to be approximately $500 million, including expenditures for technology, maintenance of fleet and facilities, new Save-A-Lot stores, and approximately 40 store remodels.

Conference Call

A conference call to review the third quarter results is scheduled for 9:00 a.m. central time today. The call will be webcast live at www.supervaluinvestors.com (click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com. To access the website replay go to the "Investors" link and click on "Presentations and Webcasts."

About SUPERVALU INC.

SUPERVALU INC. is one of the largest companies in the U.S. grocery channel with annual sales of approximately $35 billion. SUPERVALU serves customers across the United States through a network of approximately 4,350 stores composed of 1,068 traditional retail stores, including 778 in-store pharmacies; 1,329 Save-A-Lot stores, of which 946 are operated by licensee owners; and 1,950 independent stores serviced primarily by the Company's food distribution business. SUPERVALU has approximately 125,000 employees. For more information about SUPERVALU visit www.supervalu.com.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

Except for the historical and factual information contained herein, the matters set forth in this news release, particularly those pertaining to SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as "estimates," "expects," "projects," "plans," and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including competition, ability to execute initiatives, substantial indebtedness, impact of economic conditions, labor relations issues, escalating costs of providing employee benefits, regulatory matters, food and drug safety issues, self-insurance, legal and administrative proceedings, information technology, severe weather, natural disasters and adverse climate changes, the continuing review of goodwill and other intangible assets, accounting matters and other risk factors relating to our business or industry as detailed from time to time in SUPERVALU's reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

SUPERVALU INC. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
 
Fiscal Quarter Ended Fiscal Quarter Ended
December 1, 2012 December 3, 2011
(In millions, except per share data)   (12 weeks)   % of net sales   (12 weeks)   % of net sales
 
Net sales $ 7,913 100.0 % $ 8,327 100.0 %
Cost of sales     6,234   78.8 %     6,518     78.3 %
Gross profit 1,679 21.2 % 1,809 21.7 %
 
Selling and administrative expenses 1,522 19.3 % 1,610 19.3 %
Goodwill and intangible asset impairment charges     -   0.0 %     907     10.9 %
Operating earnings (loss) 157 2.0 % (708 ) (8.5 )%
 
Interest expense, net     126   1.6 %     119     1.4 %
Earnings (loss) before income taxes 31 0.4 % (827 ) (9.9 )%
Income tax provision (benefit)     15   0.2 %     (77 )   (0.9 )%
 
Net earnings (loss)   $ 16   0.2 %   $ (750 )   (9.0 )%
 
 
Net earnings (loss) per share
Basic $ 0.08 $ (3.54 )
Diluted $ 0.08 $ (3.54 )
Weighted average number of shares outstanding
Basic 212 212
Diluted 214 212
 

SUPERVALU INC. and Subsidiaries        
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
 
Fiscal Year-to-Date Ended Fiscal Year-to-Date Ended
December 1, 2012 December 3, 2011
(In millions, except per share data)   (40 weeks)   % of net sales   (40 weeks)   % of net sales
 
Net sales $ 26,542 100.0 % $ 27,869 100.0 %
Cost of sales     20,818     78.4 %     21,728     78.0 %
Gross profit 5,724 21.6 % 6,141 22.0 %
 
Selling and administrative expenses 5,325 20.1 % 5,446 19.5 %
Goodwill and intangible asset impairment charges     74     0.3 %     907     3.3 %
Operating earnings (loss) 325 1.2 % (212 ) (0.8 )%
 
Interest expense, net     422     1.6 %     394     1.4 %
Loss before income taxes (97 ) (0.4 )% (606 ) (2.2 )%
Income tax provision (benefit)     (43 )   (0.2 )%     10     0.0 %
 
Net loss   $ (54 )   (0.2 )%   $ (616 )   (2.2 )%
 
 
Net loss per share
Basic $ (0.26 ) $ (2.91 )
Diluted $ (0.26 ) $ (2.91 )
Weighted average number of shares outstanding
Basic 212 212
Diluted 212 212
 

SUPERVALU INC. and Subsidiaries    
CONDENSED CONSOLIDATED SEGMENT FINANCIAL INFORMATION
(Unaudited)
 
 
Fiscal Quarter Ended Fiscal Quarter Ended
December 1, 2012 December 3, 2011
(In millions)   (12 weeks) (12 weeks)
 
Net sales
Retail Food (1) $ 4,961 $ 5,359
% of total 62.7 % 64.3 %
Save-A-Lot (1) 966 982
% of total 12.2 % 11.8 %
Independent Business 1,986 1,986
% of total     25.1 %     23.9 %
Total net sales 7,913 8,327
      100.0 %     100.0 %
 
Operating earnings (loss)
Retail Food (2) $ 84 $ (818 )
% of sales 1.7 % (15.3 )%
Save-A-Lot (3) 28 59
% of sales 2.8 % 6.1 %
Independent Business (4) 49 66
% of sales 2.5 % 3.3 %
Corporate (5)     (4 )     (15 )
Total operating earnings (loss) 157 (708 )
% of sales 2.0 % (8.5 )%
Interest expense, net     126       119  
Earnings (loss) before income taxes 31 (827 )
Income tax provision (benefit)     15       (77 )
Net earnings (loss)   $ 16     $ (750 )
 
 
LIFO charge
Retail Food $ 3 $ 19
Independent Business     -       3  
Total   $ 3     $ 22  
 
Depreciation and amortization
Retail Food $ 171 $ 172
Save-A-Lot 15 14
Independent Business     15       16  
Total   $ 201     $ 202  

 

(1) The Company's Save-A-Lot reportable segment was formerly aggregated with the Retail Food reportable segment.
 

(2) Retail Food operating earnings for the third quarter ended December 1, 2012 includes a $41 cash settlement received from credit card companies, offset by $20 of charges for previously announced store closures.

 
(3) Save-A-Lot operating earnings for the third quarter ended December 1, 2012 includes $10 of charges for previously announced store closures.
 
(4) Independent Business operating earnings for the third quarter ended December 1, 2012 includes $1 of severance charges related to the previously announced closing of a distribution facility.
 

(5) Corporate operating loss for the third quarter ended December 1, 2012 includes $7 gain on the sale of surplus property.

 

SUPERVALU INC. and Subsidiaries  
CONDENSED CONSOLIDATED SEGMENT FINANCIAL INFORMATION
(Unaudited)
 
Fiscal Year-to-Date Ended Fiscal Year-to-Date Ended
December 1, 2012 December 3, 2011
(In millions)   (40 weeks) (40 weeks)
 
Net sales
Retail Food (1) $ 16,982 $ 18,297
% of total 64.0 % 65.7 %
Save-A-Lot (1) 3,226 3,236
% of total 12.2 % 11.6 %
Independent Business 6,334 6,336
% of total    

23.8

%     22.7 %
Total net sales 26,542 27,869
     

100.0

%     100.0 %
 
Operating earnings (loss)
Retail Food (2) $ 100 $ (541 )
% of sales 0.6 % (3.0 )%
Save-A-Lot (3) 105 178
% of sales 3.2 % 5.5 %
Independent Business (4) 164 199
% of sales 2.6 % 3.1 %
Corporate (5)     (44 )     (48 )
Total operating earnings (loss) 325 (212 )
% of sales 1.2 % (0.8 )%
Interest expense, net (6)     422       394  
Loss before income taxes (97 ) (606 )
Income tax provision (benefit)     (43 )     10  
Net loss   $ (54 )   $ (616 )
 
 
LIFO charge
Retail Food $ 14 $ 49
Independent Business     1       8  
Total   $ 15     $ 57  
 
Depreciation and amortization
Retail Food $ 577 $ 582
Save-A-Lot 52 47
Independent Business     50       51  
Total   $ 679     $ 680  

 

(1) The Company's Save-A-Lot reportable segment was formerly aggregated with the Retail Food reportable segment.
 

(2) Retail Food operating earnings for the fiscal year-to-date ended December 1, 2012 includes $74 of intangible asset impairment charges, $38 of asset impairment charges, $59 of charges for previously announced store closures, and $4 of multi-employer pension withdrawal, offset in part by $41 in a cash settlement received from credit card companies and $13 in gain on sale of assets in conjunction with the announced store closures.

 
(3) Save-A-Lot operating earnings for the fiscal year-to-date ended December 1, 2012 includes $26 of charges for previously announced store closures.
 

(4) Independent Business operating earnings for the fiscal year-to-date ended December 1, 2012 includes $1 of severance charges related to the previously announced closing of a distribution facility.

 

(5) Corporate operating loss for the fiscal year-to-date ended December 1, 2012 includes a gain on sale of surplus property, offset in part by $3 of severance charges.

 
(6) Interest expense, net for the fiscal year-to-date ended December 1, 2012 includes $22 for the write-off of unamortized costs related to debt which was replaced as a result of the recent debt refinancing.
 

SUPERVALU INC. and Subsidiaries    
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In millions)   December 1, 2012   February 25, 2012
(Unaudited)
ASSETS
 
Current assets
Cash and cash equivalents $ 155 $ 157
Receivables, net 713 730
Inventories 2,402 2,150
Other current assets     195     188
 
Total current assets 3,465 3,225
 
Property, plant and equipment, net 5,980 6,362
 
Goodwill 847 847
 
Intangible assets, net 703 809
 
Other assets     862     810
 
Total assets   $ 11,857   $ 12,053
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities
Accounts payable and accrued liabilities $ 2,423 $ 2,519
Current maturities of long-term debt and capital lease obligations 259 388
Other current liabilities     592     683
 
Total current liabilities 3,274 3,590
 
Long-term debt and capital lease obligations 6,180 5,868
 
Pension and other postretirement benefit obligations 1,027 1,126
 
Other long-term liabilities 1,369 1,448
 
Commitments and contingencies
 
Total stockholders' equity     7     21
 
Total liabilities and stockholders’ equity   $ 11,857   $ 12,053
 

SUPERVALU INC. and Subsidiaries    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   

Fiscal Year-to-Date Ended

Fiscal Year-to-Date Ended

December 1, 2012 December 3, 2011
(In millions)   (40 weeks)   (40 weeks)
 
Cash flows from operating activities
Net loss $ (54 ) $ (616 )
Adjustments to reconcile net loss to net cash provided by operating activities:

Goodwill and intangible asset impairment charges

74 907
Depreciation and amortization 679 680
LIFO charge 15 57
Asset impairment and other charges 172 10

Net gain on sale of assets and exits of surplus leases

(59 ) (12 )
Deferred income taxes (63 ) (37 )
Stock-based compensation 12 12
Net pension and other postretirement benefits cost 91 93
Contributions to pension and other postretirement benefit plans (103 ) (87 )
Other adjustments 24 13
    Changes in operating assets and liabilities     (431 )     (502 )
Net cash provided by operating activities     357       518  
Cash flows from investing activities
Proceeds from sale of assets 80 123
Purchases of property, plant and equipment (438 ) (412 )
  Other     (2 )     4  
Net cash used in investing activities     (360 )     (285 )
Cash flows from financing activities
Proceeds from issuance of debt 1,713 291
Payment of debt and capital lease obligations (1,609 ) (437 )
Dividends paid (37 ) (56 )
  Other     (66 )     (7 )
Net cash (used in) provided by financing activities     1       (209 )
Net increase (decrease) in cash and cash equivalents (2 ) 24
Cash and cash equivalents at beginning of year     157       172  
Cash and cash equivalents at the end of period   $ 155     $ 196  
 




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