QUOTE AND NEWS
Canada.com  Aug 1  Comment 
With every customer that brought it to our attention, none reported needing medical attention as a result of the tampering," said Jeff Swanson, a SuperValu spokesman
SeekingAlpha  Jul 25  Comment 
By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday July 24. 2 Picks from Leon Cooperman: Supervalu (NYSE:SVU), Atlas Energy Partners (NYSE:ATLS). Other stocks mentioned:...
SeekingAlpha  Jul 24  Comment 
SUPERVALU, Inc. (NYSE:SVU) Q1 2015 Results Earnings Conference Call July 24, 2014 10:00 AM ET Executives Steve Bloomquist - VP of Investor Relations Sam Duncan - President and CEO Bruce Besanko - EVP and Chief Financial Officer ...
Wall Street Journal  Jul 24  Comment 
Supervalu reported a 49% drop in quarterly earnings but posted sharp sales gains at a discount chain that it considers vital to its turnaround effort.
newratings.com  Jul 24  Comment 
WASHINGTON (dpa-AFX) - Grocery chain SUPERVALU Inc. (SVU) Thursday said net earnings attributable to the company declined to $43 million from last year's $85 million. Earnings per share dropped to $0.17 from $0.34. On March 21, 2013, the...
Forbes  Jul 23  Comment 
Wall Street is optimistic about SUPERVALU, which is slated to report its first quarter results on Thursday, July 24, 2014. Analysts project a profit of 17 cents a share, a rise from 14 cents per share a year ago.The consensus estimate hasn't...
Benzinga  Jul 21  Comment 
Steel Dynamics (NASDAQ: STLD) shares reached a new 52-week high of $19.80 after the company announced its plans to acquire Severstal Columbus LLC from OAO Severstal. Glu Mobile (NASDAQ: GLUU) shares reached a new 52-week high of $7.36 on Cowen...
Motley Fool  Jul 17  Comment 
Here's where investors should really be looking when the company reports earnings.
Benzinga  Jun 25  Comment 
In a report published Tuesday, Morgan Stanley analyst Vincent Sinisi initiated coverage on SuperValu (NYSE: SVU) with an Underweight rating and $7.00 price target, suggesting more than a 10 percent downside. Sinisi noted that SuperValu will...
SeekingAlpha  Jun 16  Comment 
ByEquity Watch: Supervalu Inc. (SVU) has been making efforts to improve its performance, as it is committed to improving EBITDA and invest in business growth. The company has made progress with store growth at its Save-A-Lot (SAL) retail chain,...




 

Supervalu (NYSE: SVU) is one of the largest supermarket chains in the United States with 2,349 company-operated and affiliated stores nation-wide. Supervalu has 23 dedicated distribution centers, and operates 1,161 retail food stores under multiple brand names including: Acme, Albertsons, Bristol Farms, Cub Foods, Farm Fresh, Hornbacher’s, Jewel-Osco, Lucky, Shaw’s, Shop ’n Save, Shoppers Food & Pharmacy and Star Market. In addition to competition from traditional grocer rivals such as Kroger and Safeway, Supervalu also faces increasing competition from wholesale warehouse operators such as Costco, big-box retailers such as Wal-Mart and specialty grocers like Whole Foods. In 2006, Supervalu teamed up with private equity firm Cerberus to acquire Albertson's. The acquisition significantly increased Supervalu's retail grocer operations and gave it an expanded presence in several key geographic markets including Chicago, Boston, Philadelphia and Southern California.

For 2009, Supervalu posted a net loss of $2.86 billion from its total revenues of $44.6 billion.

Company Overview

Business Segments

Supervalu conducts its operations through two segments: Retail food and Supply chain services. Its Retail food segment includes company-operated food stores and limited assortment food stores that are licensed by the company. Supply chain services includes results of sales of company-branded products to affiliated food stores and mass merchants, as well as logistics management.

Retail Food

Supervalu's Retail food segment is comprised of almost 2,400 food stores including over 850 licensed Save-a-Lot stores[1]. The segment is further subdivided by store type: combination stores, food stores and limited assortment stores. The company's multiple store type provides it with flexibility to compete in a variety geographies and competitive landscapes. Supervalu has a significant presence in southern California, New England (particularly Boston) and the mid-Atlantic.

Combination stores combine a grocery and pharmacy under one roof and are Supervalu's largest store unit. Combination stores include a full grocery offering, prescription drugs and specialty services such as seafood and meat, bakery, deli and in-store bank. Supervalu operates over 800 combination stores under brands such as Shaw's, Albertson's, Osco, Jewel, Acme, Star Market and Shop 'n Save. Combination stores typically average 60,000 SF in size.[2]

Food Stores: averaging 40,000 SF, food stores offer a more limited selection than combination stores and do not include a pharmacy. Supervalu operates approximately 400 food stores nation-wide.

Limited Assortment Food Stores: includes the company's "extreme-value grocery retailing" sector. Limited assortment stores are typically much smaller than combination and food stores, averaging 15,000 SF in size.[1]They offer a much smaller variety of high volume food products and limited general merchandise. Supervalu currently operates roughly 300 limited assortment stores, primarily under the Save-A-Lot brand name. In addition to company operated stores, Supervalu licenses 858 Save-A-Lot stores to third-party players.

Supply Services

Supervalu's supply services segment distributes food to thousands of third-party retailers in the United States. Supply services boasts the largest publicly traded wholesale food distributor in the nation. In addition to its own grocery stores, the company serves 1,920 third party food retail grocery stores as their primary grocery supplier and another 400 as a secondary grocery supplier. Supervalu also offers logistics services through its two subsidiaries; Total Logistics Inc. and Advantage Logistic. Through these subsidiaries Supervalu offers warehouse management, transportation and logistics engineering services to third parties.

Trends & Forces

Albertson's Acquisition

Supervalu joined a wave of consolidation in the supermarket industry when it teamed up with CVS Caremark and private equity group Cerberus to purchase Albertson's for $17.8B in the summer of 2006. The Albertson's transaction added 1,100 store locations to Supervalu's already large retail operation and instantly created the nation's third largest grocery chain by revenues. The acquisition allowed Supervalu to capture market share in central metropolitan areas such as Chicago, Boston, Philadelphia and Southern California where expansion might otherwise be difficult. Furthermore, Albertson's leading market share in these highly coveted markets has produced above average margins in the acquired stores which will boost Supervalu's bottom line.

Unconventional Grocers

In addition to traditional grocers such as Safeway and Kroger, Supervalu now faces stiff competition from unconventional grocers including wholesale warehouses such as Costco and BJ's as well as supercenters operated by Target and Wal-Mart.

The challenge posed by these ascendant competitors is most typified by Wal-Mart. The behemoth is a dominant presence in 89 of the 100 major MSAs. An MSA or metropolitan Statistical Area can best be thought of an extended metropolitan area. With a staggering $348B in gross sales, Wal-Mart has enormous leverage when negotiation prices with food suppliers. Wal-Mart's bargaining power as well as its huge economies of scale allow it to offer significantly discounted prices which creates downward pricing pressure throughout the entire industry. Although Wal-Mart's same store comp sales have been slowing over the last few years, it has taken market share from most major grocers in each of the markets in which it has significant presence. Fortunately, Supervalu's significant presence in denser metropolitan center's somewhere shelters it somewhat from its unconventional competitors as these locations tend to be less favorable for warehouses and supercenters. That said the Albertson's acquisition, has put SuperValue in more direct competition with Wal-Mart in some geographies, including Southern California.

Private label food

In order to increase margins and gain a competitive advantage over its rivals, Supervalu continues to invest in its private labels. It sells both higher end products under the essensia and Wild Harvest labels, "banner brand" items such Shaw's, Acme and Albertson's, and several value private label items. Supervalu also distributes its successful private labels to third party grocers through its supply services segment. Approximately 17% of the products that Supervalu sells are private label, which are typically associated with higher margins and can fuel customer loyalty.

During the most recent Investors call, Supervalu management stated they want to grow private label penetration by approximately 200 basis points by the company's fiscal Q4 2009.

Competition

Supervalu faces stiff competition from a host of different competitors, exacerbated by continuing consolidation in the supermarket industry:

Traditional Grocers

Kroger: the largest operator of traditional grocery stores in the United States and the second largest food retailer in the United States after Wal-Mart. Kroger sells food and other consumer goods in more than 2,400 supermarkets.

Safeway: Safeway (NYSE:SWY) is the nation's third largest retail grocery chain, operating more than 1,750 stores in North America.

Wholesale Warehouses

Costco: operates a chain of 520 membership warehouses, primarily in the US, that sell a wide range of merchandise, including fresh foods, household goods, electronics, and apparel. Costco's low wholesale prices give it a competitive advantage over its traditional grocer competitors.

BJ's: is a warehouse club operator in the eastern United States. As of February 3, 2007, BJ's operated 172 warehouse clubs in 16 states. In 2007, food accounted for approximately 60% of BJ's total food and general merchandise sales. BJ's low wholesale prices give it a competitive advantage over its traditional grocer competitors.

Sam's Club: Wal-Mart’s membership-only warehouse club, the second largest in America after Costco. Generated $41B in revenue in fiscal 2006.

Big Box Retailers

Wal-Mart: the world's largest retailer with FY2006 domestic revenues of $268 billion. With over 3,000 stores domestically, most of which are equipped with a supermarket, Wal-Mart is a significant player in the grocery industry. Wal-Mart's tremendous size allows it to negotiate lower prices which it passes along to its customers, putting pricing pressure on Supervalu.

Target: the sixth largest retailer in the US. Recently Target has ramped up expansion of its SuperTarget stores which include a supermarket and pose a threat to Supervalu.

Specialty Grocers

Whole Foods: currently the dominant player in the rapidly growing natural and organic food market.


Top Grocery Store Competitors
Store Market Share 2008 Revenue (billions) 2008 Net Income (billions) 2008 Sales per Square Foot
Safeway [3] 7.1% $44.1 $0.965.3 $548.56
Kroger[4] 0.4% $76.00 $1.249 $518.7
Supervalu[5] 19.2% $34.66 ($2.855) $626.3
Wal-Mart[6] 12.7% $401.2 $13.40 Not Reported

References

  1. 1.0 1.1 SVU 10-K 2009 Item 1 Pg. 6
  2. Supervalu 2006 Annual Report at 10k (p. 4)
  3. 2009 Safeway Factbook
  4. 2008 Kroger Fact Book
  5. 2009 SuperValu Annual Report
  6. 2009 Walmart Annual Report
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