Leon Bergmann has been tapped to lead Supervalu’s independent business. As president of the wholesaler/retailer’s independent business organization, he will report to Supervalu president and CEO Craig Herkert. He replaces Mark Anderson, who will be retiring from Supervalu later this summer.
Bergmann has been the company’s group vice president of independent sales, marketing and merchandising since January. In his new role, he will be responsible for the overall strategy and growth of the independent retail segment of Supervalu’s business. He will continue to oversee the independent sales, marketing and merchandising team, as well as lead the independent business regions that are strategically positioned throughout the U.S. Bergmann will begin to assume his new responsibilities immediately.
“We believe Leon’s strength and innovation in sales, his understanding of and passion for the independent retail business and Supervalu’s wholesale model, as well as his breadth of experience within the very competitive wholesale landscape nationwide make him ideally suited for this position,” Herkert said.
Prior to Bergmann’s current role at Supervalu, he worked for C&S Wholesale Grocers, where he served as senior vice president, Sales and Customer Service, Northeast. In that position, he was responsible for customer satisfaction and sales for Ahold accounts. Prior to that role, he was responsible for customer satisfaction and sales for West Coast accounts including independent retailers, Kroger, Save Mart, Lucky, FoodMaxx, Target, and FoodLand. He has been a member of the Board of Directors of IGA USA and the California Grocers Association. His connection to the grocery industry began early, with a father who worked at a Supervalu-supplied store for 28 years.
“I am looking forward to leading the Independent Business organization and building on Supervalu’s rich heritage and long-standing history of serving some of the best and most successful hyper-local independent retailers in the nation,” Bergmann said. “Supervalu has an unparalleled suite of professional retail support services, boasts a vast distribution network that reaches coast-to-coast and border-to-border, and is able to leverage the power of a $38 billion company to serve independents and help them compete in an ever-changing marketplace. All of these things are top of mind as we move forward, and we are absolutely committed to growing our Independent Business.”
Anderson will work with Bergmann to ensure a smooth transition, and his anticipated last day with the company will be August 31.
In related Supervalu news, the company announced on July 26 that its fiscal 2012 first-quarter earnings rose 10 percent, due primarily to cost cutting initiatives and lower effective-tax rate. Overall sales and identical store revenue both continued to decline for the period ended June 18.
The Eden Prairie, MN based retailer/wholesaler earned $74 million, or 35 cents per share, for the quarter. That’s up from $67 million, or 31 cents per share, in the same quarter last year.
Excluding 12 cents per share in charges for closing stores in Connecticut and Cincinnati and a labor dispute at its Shaw’s chain, earnings were 43 cents per share, the company noted.
Supervalu’s overall revenue fell 4 percent to $11.11 billion and sales at stores open at least a year declined 3.9 percent, marking the 13th consecutive quarter that the company has posted negative ID revenue.
Supervalu’s selling and administrative expenses were $2.2 billion or 19.6 percent of sales, down from $2.3 billion or 19.9 percent of sales a year ago. The improvement stemmed largely from cost-cutting and a boost in fuel sales.
“First quarter results reflect the progress we are making on our ‘8 Plays to Win’ strategy, and we remain on track to deliver our fiscal 2012 guidance,” said Herkert. “Our dedicated associates are utilizing new planning tools, analytics and a hyper local focus to help us meet the needs of today’s consumers, while reducing shrink and improving our operations.”
First quarter retail food net sales were $8.6 billion compared to $9.0 billion last year. Total retail square footage was 63.5 million, a 2.1 percent decrease from the first quarter of fiscal 2011 primarily as a result of fiscal 2011 market exits. Excluding the impact of market exits and store closures, total retail square footage increased 1.8 percent compared to the first quarter of fiscal 2011, the company noted.
First quarter independent business (formerly known as supply chain services) net sales were $2.5 billion compared to $2.6 billion last year, a decrease of 3.6 percent, primarily reflecting the divestiture of Total Logistic Control, which occurred in the fourth quarter of fiscal 2011.
Gross profit margin in the first quarter was $2.5 billion, or 22.1 percent of net sales, compared to $2.6 billion or 22.5 percent last year. The decrease in gross margin as a percent of net sales reflects a higher LIFO charge, the impact of higher fuel sales, as well as the mix impact resulting from the divestiture of Total Logistic Control in the fourth quarter of fiscal 2011. In addition, the benefits of promotional effectiveness and reduced shrink fully funded price investments in the quarter.
Selling and administrative expenses in the first quarter were $2.2 billion, or 19.6 percent of net sales, compared to $2.3 billion, or 19.9 percent of net sales last year. The decrease in selling and administrative expenses as a percent of net sales reflects savings achieved from cost reduction initiatives, the benefit of higher fuel sales and a reduction in corporate expenses for non-operating properties. These benefits were partially offset by the impact of sales deleveraging and increases in employee-related expenses.
Operating earnings for the first quarter were $280 million, or 2.5 percent of net sales, compared to $301 million, or 2.6 percent of net sales last year. Retail food operating earnings were $219 million, or 2.5 percent of net sales. Last year’s retail food operating earnings were $251 million, or 2.8 percent of net sales, and included $21 million in net pre-tax charges primarily related to retail market exits in Connecticut and Cincinnati, as well as the impact of the labor dispute at Shaw’s. When adjusting for these items, last year’s retail food operating earnings were $272 million, or 3.0 percent of net sales. The change in retail food operating earnings as a percent of net sales was the result of a higher LIFO charge and reduced sales leverage on operating expenses, which were partially offset by cost reduction initiatives.
Independent business operating earnings were $77 million, or 3.1 percent of sales, compared to $79 million, or 3.0 percent of sales last year.
Supervalu income tax expense was $51 million, or 40.8 percent of pre-tax income, in the first quarter compared to $60 million, or 47.5 percent of pre-tax income, in last year’s first quarter. This year’s rate reflected approximately $4 million of tax expense related to prior years’ audit activity. Last year included $12 million of tax expense for non-deductible goodwill related to retail market exits in Connecticut and Cincinnati.
Supervalu reaffirmed its full-year guidance and said it expects to generate fiscal 2012 earnings per diluted share, on a GAAP basis, within its previously disclosed range of $1.20 to $1.40.
Supervalu’s fiscal 2012 guidance includes the following assumptions:
Net sales for the 52-week fiscal year are estimated to be approximately $37 billion; identical store sales growth, excluding fuel, is projected to be in the range of negative 1.5 percent to negative 2.5 percent; sales in the independent business segment are expected to be down 2 percent to 4 percent from fiscal 2011; the effective tax rate is estimated to be approximately 37.4 percent in each of the remaining quarters of the fiscal year; weighted-average diluted shares are estimated to be approximately 213 million; capital spending is projected to be approximately $700 to $750 million, which will include 55 to 75 store remodels and 210 Save-A-Lot stores, including licensed locations; no new traditional retail supermarkets are planned for fiscal 2012; debt reduction is estimated to be approximately $500 to $550 million.