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Supervalu Q3 Loss Widens, Cuts Full-year Outlook - Update


Grocery retailer Supervalu, Inc. (SVU) on Wednesday reported a loss for the third quarter that widened from last year, hurt by higher goodwill and impairment charges as well as lower revenues. Earnings per share matched analysts' expectations, while revenues missed their estimates.

Looking ahead, the company lowered its earnings and revenue forecast for fiscal year 2012. The company's shares are down 11 percent in the pre-market.

The Eden Prairie, Minnesota-based company's third-quarter net loss was $750 million or $3.54 per share, wider than net loss of $202 million or $0.95 per share in the prior-year quarter.

The latest quarter's results include non-cash goodwill and intangible asset impairment charges of $800 million or $3.78 per share, while the year-ago period's results included charges of $252 million or $1.19 per share.

Excluding the charges, adjusted earnings for the quarter were flat with the year-ago period at $50 million or $0.24 per share. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.24 per share. Analysts' estimates typically exclude special items.

Net sales declined 3.9 percent to $8.33 billion from $8.67 billion in the prior-year period, but missed analysts' consensus estimate of $8.42 billion.

The decline in sales reflects a 2.9 percent decrease in identical store sales, and previously announced market exits. Total retail square footage declined 1.5 percent from the year-ago period to 63.6 million, primarily as a result of fiscal 2011 market exits.

Craig Herkert, Supervalu's Chief Executive Officer and President said, "Supervalu continued to execute on its business transformation this quarter and remains on plan with its 8 Plays to Win strategy. Even with the ongoing difficult economic environment and pressured consumer, we continued to make progress against our plan, allowing us to invest in price to deliver everyday value and hyper local choices that meet the needs of our customers in the diverse neighborhoods we serve."

Net sales for retail food decreased 3.5 percent to $6.34 billion, while independent business sales declined 5.2 percent to $1.99 billion from last year's $2.10 billion.

However, the company's gross margin edged up to 21.7 percent from 21.5 percent last year, reflecting the benefits of promotional effectiveness, partially offset by retail price investments and a higher LIFO charge.

For fiscal 2012, Supervalu now forecasts reported loss of $2.58 to $2.48 per share, compared to the prior forecast for reported earnings of $1.20 to $1.30 per share.

The company currently forecasts full-year adjusted earnings of $1.20 to $1.30 per share, in line with its previous forecast for reported earnings. Analysts expect the company to report earnings of $1.25 per share.

Further, Supervalu lowered its revenue outlook for the year to about $36.1 billion from the prior forecast of about $36.5 billion. Analysts have a consensus estimate of $36.50 billion.

The company projects identical store sales growth for the year, excluding fuel, to be approximately negative 2.5 percent to negative 3.0 percent, down from the prior forecast of approximately negative 2.0 percent to negative 2.5 percent.

SVU closed Tuesday's trading at $8.39. In Wednesday's pre-market, the stock is losing $0.93 or 11.08 percent to $7.46.

by RTTNews Staff Writer

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