Supervalu Sales, Earnings Still Poor; CEO Duncan ‘Shocked’ At Perishable Conditions
You can’t blame the new Supervalu management team for the continuance of the poor sales and earnings the Eden Prairie, MN posted in its fourth quarter ended February 23. That blame should be shouldered by the “triad of ineptitude” – previous CEOs Jeff Noddle, Craig Herkert and Wayne Sales.
So, while non-executive chairman Bob Miller and new CEO Sam Duncan enter their new jobs with a clean slate, the transgressions of the past will certainly make their roles very challenging.
For the record, Supervalu lost $1.41 billion on net sales of $3.89 billion (down from $3.98 billion in the corresponding quarter last year). Its retail division’s (excluding Save-A-Lot) sales declined 4.4 percent (that division lost $238 million) and identical store sales continued a familiar pattern, declining 4.1 percent (an incredible feat when you consider that SVU has been cycling pitiful ID sales for almost five years and continues to decline).
Yes, it’s a mess, and while Miller and Duncan certainly have a plan, there’s no guarantee that it will work, given the level of current competition and the steepness of the mountain they must climb.
The new leadership team should help, and so should a return to more local merchandising and operations practices. But there are many areas in many markets where SVU has fallen so far behind it will not only take improved management talent, but significant capital investment to increase market share and improve consumer perception. And one wonders whether a company that is controlled by a private equity firm will be willing to spend enough to move the needle forward. Because Supervalu woes run much deeper than swapping corporate jobs for local positions and are more complex than fixing pricing and merchandising problems.
At a recent Barclay’s Retail Conference in Manhattan, Duncan stated he was “shocked” at the poor conditions at Supervalu’s corporate stores. Duncan has said from the outset that improving the company’s perishables would be a key strategic component in improving Supervalu’s corporate store and independent wholesale sales.
And without the burden of the former Albertsons banners (877 stores) to worry about, a downsizing of the entire organization and a hand-picked new management team, the infrastructure is now in place for improvement at Supervalu. How quickly and to what extent that improvement will occur is something that we’ll all be watching.