1Q17 RESULTS

Adjusted EPS was $0.19, down 17.4% year over year and below the consensus estimate of $0.22. Supervalu reported fiscal 1Q17 net sales of $5.2 billion, compared to $5.4 billion in the year-ago quarter. Comparable-store sales declined across all of the company’s divisions. Management commented that it will replace lost business and attract new customers through its long-term agreement to become the primary grocery supplier for Indiana-based Marsh Supermarkets and through the acquisition of 22 Food Lion grocery stores.

PERFORMANCE BY DIVISON

The wholesale division reported revenues of $2.3 billion, down 7.6% year over year, owing to lost stores and lower sales from existing customers. The decline was partially offset by increased sales to new stores operated by existing customers and from new customers. The wholesale segment lost the business from Albertsons stores in the Southeast, and most of the volumes from Haggen stores in the Pacific Northwest. Management believes that succeeding in its produce business believes winning its produce business is critical because it can deliver lower costs of goods, fresher product and a broader assortment to its wholesale customers. The wholesale division accounted for 44% of total revenue. Grocery discount chain Save-A-Lot reported revenues of $1.4 billion, up 1.7% from the year-ago quarter. The sales increase reflects new corporate and licenses stores, partially offset by a same-store sales decline of 1.4%. Cost deflation remains a headwind, coming in at around 5% in the quarter. This was higher than at many of Save-A-Lot’s food-retailing peers due to the company’s higher mix of commodity items. The grocery discount chain division accounted for 28% of total revenue. The retail division reported revenues of $1.4 billion, down 2.9% year over year, driven by a 4.5% comp decline, which was partially offset by sales from new stores. Customer accounts fell by 4.1% and basket size declined by 40 basis points. The retail division accounted for 28% of total revenue.