SUPERVALU INC. (NYSE:SVU) shares were up 3% at $7.25 yesterday as the company posted improved quarterly profit. Looks like, the trimming of operation that started less than a year back is working for the grocery store. The company sold five of its stores including; Albertson’s and Jewel-Osco. The operations have been curtailed to focus more on Save-A-Lot and smaller regional chains to wither the away the rising competition in the supermarket industry.
Save-A-Lot stores, a big positive
According to the Minneapolis-based company, sales at the Save-A-Lot stores open at least a year were up 1.7% coupled with improved margins backed by cost-cutting measures. SUPERVALU INC. (NYSE:SVU) earned 31 million or 12 cents per share for the period ending Nov. 30. The numbers were 16 million or 8 cents per share for the same period last year.
The quarter marked the first time since 2012, when the same store sales for Save-A-Lot stores were positive. For future growth, analysts are optimistic on the Save-A-Lot stores. “One of the real highlights of this quarter was the sales momentum we continue to see at Save-A-Lot,” CEO Sam Duncan told analysts.
Mixed performance in the quarter
According to Goldman Sachs analyst Stephen Grambling, third quarter for Supervalu was filled with “mixed trends.” Supervalu, which has more than 3,300 stores, experienced improved operating profits in all three divisions, even though the sales in two of them reported a decline.
After excluding one-time items, the company earned 13 cents per share, which was a marginally less than the Wall Street estimates, according to FactSet. Nat sales for the company were down 1% to $4.01 billion missing analysts estimate of $4.05 billion, according to FactSet. In the wholesale grocery operation, sales were down as the company lost two significant customers.
Duncan told analysts the company is showing improved performance in all segments by making customer-friendly moves including lowering the prices at chains like Cub.
“During the quarter, we made progress on a number of important initiatives in all three business segments,” Duncan told analysts.
Duncan, who will complete a year with SUPERVALU INC. (NYSE:SVU) next month, took control of the company after it sold its largest grocery chains, which almost reduced the operations to half the size.