Supervalu says it may spin off Save-a-Lot

Shares of Supervalu Inc. surged the most in more than a year Tuesday after the company said it is considering spinning off the Save-a-Lot grocery-store chain to focus more attention on its food-distribution business.

Supervalu has more than 1,300 Save-a-Lot locations nationwide, with about 20 in the Philadelphia region.

A timetable for the separation has not been set, and there is no assurance that a deal will be completed, Eden Prairie, Minn.-based Supervalu said in a statement.

Spinning off Save-a-Lot would allow Supervalu to concentrate on wholesaling goods to other food retailers, which accounted for almost half its sales in its most recent fiscal year. Save-a-Lot generated about a quarter of Supervalu's sales. About 430 stores are owned by the company, and 900 are operated by licensees.

CEO Sam Duncan "is taking steps to pursue strategic alternatives sooner than we expected," Ajay Jain, an analyst at Pivotal Research Group, said in a note.

Supervalu shares rose 11 percent, to close at $8.14, their biggest gain in more than 15 months.

Joe Feldman, an analyst at Telsey Advisory Group, said of a possible sale: "It's a way to play the low- to middle-income consumer beyond just buying at a dollar store or Walmart. It would probably create some buzz and awareness."

On Tuesday, the company also posted first-quarter profit and sales that topped analysts' estimates. Save-a-Lot's identical-store sales, however, trailed projections. They rose 0.6 percent in the quarter, while analysts estimated a gain of 2.6 percent, according to Consensus Metrix.

Supervalu, which until March 2013 was the parent company of Acme Markets, is seeing more competition from both discounters and higher-end supermarkets. Aldi Inc. is expanding in the United States, while Whole Foods Market Inc. is developing a grocery chain for millennials. Both have stores locally.