Company Outlines Significant Wholesale Growth
and Steps to Drive Value Creation
SUPERVALU INC. (NYSE:SVU) today confirmed that Blackwells
Capital (“Blackwells”) has announced its intent to nominate
director candidates to stand for election to the Board of Directors
at the Company’s 2018 Annual Meeting of Stockholders. The date of
the Company’s 2018 Annual Meeting has not yet been announced.
SUPERVALU stockholders are not required to take any action at this
time.
The Company issued the following statement:
The SUPERVALU Board and management team are
confident that their ongoing efforts to transform the Company are
driving growth and enhancing SUPERVALU’s unique competitive
position. The Board and management team are committed to delivering
value for all stockholders, have been and continue to proactively
develop and pursue all opportunities to create stockholder value,
and remain open-minded and receptive to ideas that enhance
stockholder value.
To that end, over the past few months,
members of SUPERVALU’s Board and management team have had several
discussions and meetings with representatives of Blackwells.
Discussions encompassed a variety of topics pertaining to the
business and the Company’s ongoing initiatives as well as our Board
refreshment efforts – initiatives that have been underway
substantially since before Blackwells became a stockholder. Despite
our efforts to reach a constructive path forward and to discuss
overlapping objectives, Blackwells has decided to threaten an
unnecessary and counterproductive proxy contest.
Rapid Transformation Underway
SUPERVALU has been rapidly and strategically
transforming its business to become a wholesale company focused on
the distribution of consumable products across the United States.
Sales from SUPERVALU’s wholesale operations are now approximately
75% of its total annual sales, up from approximately 44% only two
years ago. To achieve this transformation, we have executed on
several initiatives and continue to pursue others, including:
- Added more than $5 billion in run rate
sales to bring our core wholesale business to nearly $13 billion,
including the addition of significant new wholesale customers such
as The Fresh Market and the acquisition of two strategic wholesale
companies of Unified Grocers and Associated Grocers of Florida this
fiscal year
- Brought in new leadership in Wholesale
to drive operational improvements and ensure smooth integrations of
our acquired businesses
- Brought in new leadership in Retail to
make fundamental changes to this business, and to better align
retail initiatives with our wholesale operations
- Completed the sale of Save-A-Lot for
$1.3 billion, significantly reducing our debt and fundamentally
improving our balance sheet, creating the flexibility to pursue our
growth strategy
- Continued initiatives for sales and
closures of select retail assets, monetization of real estate
through sale leaseback transactions, and cost reductions.
Executing on a Wholesale Strategy That is
Showing Results
Management has implemented an effective three
prong wholesale strategy that is producing strong results: 1)
Retain existing customers; 2) Do more business with existing
customers; and 3) Gain new customers. Execution of detailed action
plans underlying each prong and our unrelenting focus on customer
service has driven customer retention to historical highs and
created significant organic growth. In addition, our integration of
Unified Grocers and Associated Grocers of Florida remains on-track
to generate the expected synergies. We believe our efforts are
strengthening SUPERVALU’s industry position, creating new avenues
of growth and further positioning SUPERVALU to be the grocery
supplier of choice for retailers throughout the United States.
Taking Action on Retail
We continue to invest in well positioned
retail assets, which remain important customers of our growing
wholesale business. Retail assets that are not well positioned for
long-term success are being operated to maximize cash flow,
including limited capital investment. Capital invested into our
retail stores will continue to be targeted, prudent, and focused in
areas designed to generate incremental sales. We continue to pursue
store sales and closures for underperforming locations while
exploring options for specific banners.
Wind Down and Conclusion of TSA
The Company’s agreed upon wind down of its
contractual relationships with Albertson’s is expected to largely
conclude later this year as has been previously disclosed. This
wind down includes the end of the significant revenue from the
transition services agreements (TSA) as well as the need for us to
relocate from the automated Lancaster, PA distribution center to
the recently purchased facility in Harrisburg, PA. The final wind
down of the TSA and related revenues this fiscal year and the
incremental expenses for the Harrisburg facility end the benefits
we have had from these relationships as a result of the 2013
transaction with Albertson’s. We remain focused on cost
reductions and right-sizing our cost structure in light of the
changing nature of our business.
Marketing Real Estate Underway
The Board and management team continuously
and carefully evaluate the Company’s capital allocation and assets.
The Company owns over 18 million square feet of real estate that
currently provides operational and financial flexibility. The
Company has publicly stated it is exploring a sale-leaseback for a
portion of this real estate with an emphasis on its distribution
center properties. Any such transaction must allow for the
continued operational and financial flexibility of the Company’s
logistics network. CBRE, Inc. has been retained to assist with the
evaluation and marketing process, and any proceeds would be used to
reduce outstanding debt.
Board Composed of Proven Leaders with
Diverse Experience
The Company notes that its Board is composed
of nine highly qualified directors, eight of whom are independent,
and all of whom are active, engaged and have the expertise needed
to support the Company’s operational and strategic plans.
SUPERVALU’s directors are proven leaders with diverse experience
including in the wholesale, retail, finance, accounting and food
industries. All SUPERVALU Board members are annually elected.
Moreover, Board refreshment has been, and continues to be, a top
governance priority for the Company, with two of the nine directors
having joined the Board in the past two years, and six of the nine
directors having served on the Board for less than five years.
In keeping with its standard practice, the SUPERVALU Board’s
Corporate Governance and Nominating Committee will evaluate
Blackwells’ nominees, if and when submitted, in due course. The
Board will present its formal recommendation regarding director
nominations in its definitive proxy materials, which will be filed
with the Securities and Exchange Commission.
Wachtell, Lipton, Rosen & Katz is serving as legal counsel
to SUPERVALU.
About SUPERVALU INC.
(The following information does not include Associated Grocers
of Florida which became part of SUPERVALU on December 8, 2017)
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with annual sales of approximately $16
billion. SUPERVALU serves customers across the United States
through a network of 3,324 stores composed of 3,111 wholesale
primary stores operated by customers serviced by SUPERVALU's food
distribution business and 213 traditional retail grocery stores
operated under five retail banners in six geographic regions (store
counts as of December 2, 2017). Headquartered in Minnesota,
SUPERVALU has approximately 31,000 employees. For more information
about SUPERVALU visit www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information, the matters
set forth in this news release, particularly those pertaining to
SUPERVALU’s efforts and initiatives to transform its business and
assets and SUPERVALU’s expectations regarding the potential impact
of those efforts and initiatives on its future operating results,
and other statements identified by words such as "estimates"
"expects," "projects," "plans," "intends," "outlook" and similar
expressions are forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ
materially, including the ability to execute on the initiatives on
a timely basis or at all, the ability to recognize the expected
benefits of the initiatives, the potential for disruption to the
business during the process, the ability to effectively manage
organization changes during the pendency of or following any
transaction, and other risk factors relating to the business or
industry as detailed from time to time in SUPERVALU's reports filed
with the SEC. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
news release. For more information, see the risk factors described
in SUPERVALU’s Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and other filings with the SEC. Unless legally required,
SUPERVALU undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180207005811/en/
SUPERVALU INC.For Investors:Steve Bloomquist,
952-828-4144steve.j.bloomquist@supervalu.comorFor Media:Jeff
Swanson, 952-903-1645jeffrey.s.swanson@supervalu.comorJoele Frank,
Wilkinson Brimmer KatcherJames Golden / Leigh
Parrish212-355-4449
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