(RTTNews) - Tuesday, grocery stores operator Supervalu Inc. (SVU: News ) reported a sharp decline in first-quarter profit, negatively impacted by lower sales amid the ongoing difficult economic environment. Adjusted earnings per share also fell from last year, yet topped the market projections, while net sales with a 4.7% decline missed Wall Street view. Further, the company trimmed its fiscal 2010 earnings forecast. Separately, Eden Prairie, Minnesota-based Supervalu said it would sell majority of Albertsons stores in Utah to Associated Food Stores, resulting in net proceeds of about $150 million.

Net earnings for the first quarter fell to $113 million or $0.53 per share from last year's net earnings of $162 million or $0.76 per share. The latest quarter results included costs related to store closures of $3 million or $0.02 per share, while prior year's results included one-time acquisition related costs of $6 million or $0.03 per share.

Excluding one-time costs, adjusted earnings per share for the quarter were $0.55, down from $0.79 in the previous year. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.53 per share for the quarter. Analysts' estimates typically exclude special items.

In late June, Supervalu had stated that it anticipates first-quarter earnings to be "substantially" below the then consensus of Wall Street analysts, as a tougher-than-expected business environment, investments in price and higher levels of promotional spending battered same-store sales and net earnings in the quarter. Analysts' then projection for quarterly earnings was $0.65 per share.

Net sales for the first quarter fell to $12.72 billion from $13.35 billion in the year ago quarter, and missed nine analysts' consensus revenue estimate of $12.82 billion.
Commenting on the results, Craig Herkert, Supervalu's chief executive officer, said, "As we noted in our press release of June 24th, our first quarter results reflected the continuing difficult economic environment as well as investments we are making in price and higher levels of promotional spending. As a result, sales and margins in the first quarter were weaker than originally expected. We anticipate no near-term change in consumer spending patterns and we will operate our business accordingly."

In the first quarter, retail food net sales dropped 4.3% to $9.90 billion from $10.35 billion last year, primarily reflecting the impact of identical store sales of negative 3.2% on challenging economic environment, heightened competitive activity and additional investments in price and promotions, together with previously announced store closures.

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