Supervalu Inc.'s (SVU) fiscal first-quarter earnings rose 10% thanks to a lower effective-tax rate though the supermarket operator posted weaker sales and margins.
Grocers and food companies have been raising some prices to offset rising commodities costs despite risks that consumers will buy less because of concerns about the economy and high unemployment.
Supervalu, whose supermarket brands include Albertsons and Shaw's, has been striving to cut expenses and become more cost-competitive with rivals. Plans include a revamp of its private-label strategy--replacing existing store brands that are named for its chains, such as Jewel Osco and Albertsons, with a national Essential Everyday brand. The company expects the move will increase its leverage with suppliers and allow a national advertising approach.
For the quarter ended June 18, Supervalu reported a profit of $74 million, or 35 a share, up from $67 million, or 31 cents a share, a year earlier. Prior year earnings were 43 cents excluding charges related to market exits and a labor dispute.
Revenue decreased 3.7% to $11.11 billion on exits from some markets and an identical-store sales decline of 3.9%.
Analysts polled by Thomson Reuters most recently forecast earnings of 33 cents on revenue of $11.16 billion.
Gross margin edged down to 22.1% from 22.5% amid inventory impacts.
The company's effective income-tax rate declined to 40.8% from 47.5%.
Shares of Supervalu, which affirmed guidance for the fiscal year, closed Monday at $8.52 and were inactive premarket. The stock is down 26% in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com