Less than a year after Cerberus Capital Management gained control of Supervalu, Inc. (SVU) with its newly created subsidiary, Symphony Investors, and named industry veteran Robert Miller as its non-executive chairman, the former Albertsons and Fred Meyer executive has resigned “to focus on other demands.” One of those “demands” could be related to his other job as CEO of Cerberus’ related investment in New Albertsons, Inc. Industry speculation has been rampant that Cerberus/New Albertsons is aggressively pursuing Safeway as a potential acquisition target (see related story in the “Taking Stock” column on page 15. Supervalu also reported its third quarter earnings which saw the Eden Prairie, MN-based retailer/wholesaler increase its profit despite declining revenues.
Miller’s job as SVU chairman will be filled by another company director, Gerald Storch.
Storch is currently chairman and CEO of Storch Advisors, a consulting firm that focuses primarily on retailing, ecommerce, consumer products and services, and consumer financial services. From 2006-2013, he was chairman and CEO of Toys “R” Us, and before that he was vice chairman at Target Corp. During more than a decade with Target, he led the retailer’s ecommerce site, the Target grocery business, and the Target Financial Services credit card business, and oversaw Marshall Field’s Department Stores.
“We are thrilled to have Jerry Storch as our new non-executive chairman of the Supervalu board of directors,” said Phil Francis, a Supervalu director. “Jerry’s tremendous experience in food and specialty retailing makes him especially well qualified for this role. “At the same time, we are very grateful to Bob Miller, who is truly a giant in the retail grocery industry, for his service on the Supervalu board of directors.”
Miller will continue as a non-paid advisor to the board. Supervalu’s 11-person board includes seven members who are independent directors under the New York Stock Exchange listing standards.
On the balance sheet, for the period ended November 16, 2013, Supervalu reported third quarter fiscal 2014 net sales of $4.01 billion and net earnings of $31 million, or $0.12 per diluted share.
Net earnings from continuing operations for the third quarter of fiscal 2014 were $32 million, or $0.12 per diluted share, and included $3 million in after-tax net charges and costs comprised of a multi-employer pension plan withdrawal charge, asset impairment, contract breakage, and other costs, offset in part by a gain from the sale of a property and the reduction of previously accrued severance costs.
When adjusted for these items, third quarter fiscal 2014 net earnings from continuing operations were $35 million, or $0.13 per diluted share. Net loss from continuing operations for last year’s third quarter was $15 million, or $0.07 per diluted share, which included $1 million in after-tax net charges primarily related to store closure and severance charges offset in part by a gain related to a cash settlement from credit card companies.
When adjusted for these items, last year’s third quarter net loss from continuing operations was $14 million, or $0.07 per diluted share. Net loss from discontinued operations in the third quarter of fiscal 2014 was $1 million.
“Although we are less than a year removed from the sale of five of our retail banners, Supervalu has made positive strides in all three of our business segments to better position the company for financial growth and improved shareholder value,” said CEO Sam Duncan. “Although we still have work to do to improve our sales trajectory, I am pleased with the accomplishments we made within our operations this quarter and look forward to completing my first fiscal year leading this company.”
The third quarter net sales figure of $4.01 billion compared to $4.05 billion last year resulted in a decrease of 1.0 percent. Identical store sales in the Save-A-Lot network were positive 1.7 percent. Identical store sales for corporate stores within the Save-A-Lot network were positive 5.4 percent. Identical store sales in the “Retail Food” segment (Shoppers, Farm Fresh, Shop ‘n Save, Cub and Hornbacher’s) were negative 1.9 percent. Total sales within the “Independent Business (wholesale)” segment also decreased by 3.7 percent. Fees earned under the Transition Services Agreements (TSA) in the third quarter were $48 million compared to $10 million last year.
Gross profit for the third quarter was $569 million, or 14.2 percent of net sales, and included a $3 million pre-tax multi-employer pension plan withdrawal charge. When adjusted for this charge, gross profit for the third quarter was $572 million, or 14.3 percent of net sales. Last year’s third quarter gross profit was $530 million, or 13.1 percent of net sales. The increase in gross profit compared to last year was primarily driven by incremental fees earned under the TSA and the benefits of lower infrastructure costs.