Eden Prairie, Minn. Supervalu said Tuesday that the discount grocer plans to double its chain size to 2,400 stores during the next five years.
"This is not an abandonment of traditional grocery; this is an acceleration of Save-A-Lot," CEO Craig Herkert told analysts during Supervalu's fiscal second-quarter earnings call.
Supervalu said its core business will remain its chain of traditional supermarkets, including Albertson's, Jewel-Osco and Farm Fresh.
On Tuesday, Supervalu reported profit decline of 42% for the quarter ended Sept. 12; total revenue fell 7.5% to $9.46 billion.
"There is no single pill we get to take to get this right," said Herkert, explaining a shore-up effort will include vendor negotiations and analyzing store categories with an eye toward reducing the number of products offered.
Supervalu said its plan to expand the Save-A-Lot store base is a push to soften the blow of future economic recessions and cater to what appears to be a long-term turn toward thriftiness by many customers. Part of the plan emphasizes putting the cheaper Save-A-Lot stores, about 75% of which are franchised to licensees, in neighborhoods where they will compete with pricier traditional grocery stores.