Supervalu shares fall 14% on 3Q losses

MINNEAPOLIS - Supervalu Inc. shares were down almost 14 percent this morning after the grocery chain - which owns Acme - lost money in its fiscal third quarter as the grocer dealt with hefty charges and promotions that were less effective than it hoped.

The company that also runs Albertsons, Jewel-Osco and other chains also cut its full-year earnings outlook.

Its stock dropped $1.19, or 13.85 percent, to $7.40 shortly after trading opened today on the New York Stock Exchange.

Supervalu lost $202 million, or 95 cents per share, for the period ended Dec. 4. A year ago it earned $109 million, or 51 cents per share.

Quarterly charges totaled $252 million, or $1.19 per share. This included charges to write down the value of goodwill and other assets of 99 cents per share, store closing and exit costs of 14 cents per share, and 6 cents per share, mostly tied to severance and labor buyout costs.

Excluding these items, earnings were 24 cents per share, which missed Wall Street's expectations for 32 cents per share.

Revenue fell 6 percent to $8.67 billion as retail food revenue declined 7.7 percent to $6.6 billion. Analysts surveyed by FactSet expected slightly higher revenue of $8.71 billion.

Revenue at stores open at least a year dropped 4.9 percent in the quarter. This figure is a key gauge of a retailer's health because it measures results at existing stores rather than newly opened ones. The company blamed the weaker-than-expected performance on increased competition and challenging economic conditions.

Supervalu was one of the industry laggards heading into the recession and its problems have been compounded since then as shoppers cut spending and competition intensified.

Acme Markets told workers last week that it would close five unprofitable Philadelphia-area stores by the end of February.

Its stock was one of the worst performers in the Standard & Poor's 500 in 2010, dropping 24 percent.

The company has revamped its management team, cutting costs, lowered debt and closed some stores as part of a turnaround effort. In the last few months it announced the sale of its Bristol Farms chain and its logistics and supply-chain business.

Supervalu has also tried to put emphasize lower prices, a key to winning today's shoppers. But the company indicated last quarter that those efforts aren't paying off as quickly as expected.

At that time, the grocery store operator said it expected the third quarter would be a "transition period" and results may not be seen until the end of its fiscal year for its efforts.

For fiscal 2011 Supervalu now expects a loss of $7.09 to $7.19 per share and adjusted earnings of $1.25 to $1.35 per share. It previously predicted a loss of $5.74 to $5.94 per share and adjusted earnings of $1.40 to $1.60 per share.

Analysts expected earnings of $1.43 per share for the year.

Supervalu predicts fourth-quarter adjusted earnings of 30 cents to 40 cents per share, below analysts' estimates for earnings of 44 cents per share.

Supervalu has about 4,270 stores in the United States and approximately 150,000 employees.