Supervalu Expanding Distribution Unit as Retail Sales Fall
October 18 2017 - 8:17AM
Dow Jones News
By Cara Lombardo
Supervalu Inc. said Wednesday that it will buy Associated
Grocers of Florida for $180 million as it continues to bulk up its
distribution operations to offset sagging sales at its retail
stores.
Supervalu's purchase of Associated Grocers, which includes debt,
allow it to pick up a grocery cooperative that sells products to
independent retailers in the U.S., but also in the Caribbean,
Central and South America, and Asia. In its fiscal year ended July
29, Associated Grocers posted revenue of about $650 million,
according to an estimate from Supervalu.
The two companies expect the deal to close by the end of the
year, subject to approval by Associated Grocers's shareholders.
The deal comes as Minnesota-based Supervalu continued to show
weakness in its retail business. The company posted a net loss in
its second fiscal quarter of $25 million, compared with a profit of
$31 million a year ago.
The latest quarter included a $27 million impairment charge on
its retail business. It also recorded $16 million in merger and
integration expenses following the recent acquisition of
distributor Unified Grocers.
Adjusted earnings were 46 cents a share, which met expectations
from analysts.
Net sales in Supervalu's retail locations slid 1.1% to $1
billion as comparable sales retreated 3.5%. The company has shrunk
its network of stores from about 1,500 in 2012 to around 200.
Supervalu shares, down 41% this year, rose 3.2% premarket
Wednesday on low volume.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
October 18, 2017 08:02 ET (12:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Supervalu (NYSE:SVU)
Historical Stock Chart
From Aug 2024 to Sep 2024
Supervalu (NYSE:SVU)
Historical Stock Chart
From Sep 2023 to Sep 2024