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SuperValu returns to profit in Q2; on track to open 80 to 90 Save-A-Lot stores

BY Marianne Wilson

Minneapolis — SuperValu reported net income of $60 million for its fiscal second quarter, compared with a year-ago loss of $1.47 billion that was the result of one-time charges. Although the company’s results beat analysts’ estimates, it cut the high end of its fiscal 2012 earnings.

Revenue dropped 3% to $8.43 billion from $8.66 billion, but still beat Wall Street’s estimate of $8.36 billion.

Retail food sales slipped to $6.6 billion from $6.7 billion as SuperValu exited certain markets and same-store sales fell 1.8%. Independent business sales declined to $1.8 billion from $2 billion primarily due to Target Corp.’s shift to self-distribution and the sale of Total Logistic Control.

In fiscal 2012, capital spending is projected to be approximately $700 to $725 million, which will include 80 to 90 store remodels. Save-A-Lot will increase its store count by approximately 80 to 90 stores.

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More consumers to use mobile devices to comparison shop this holiday season

BY CSA STAFF

WASHINGTON — It looks like this year’s holiday shoppers have a renewed focus on value and will comparison shop by utilizing smartphones, tablets and mobile applications to make purchasing decisions, according to the latest National Retail Federation Survey.

Although NRF is still forecasting overall holiday retail sales to grow 2.8% to $465.6 billion, the group’s 2011 Holiday Consumer Intentions and Actions Survey — conducted by BIGresearch — found that holiday shoppers plan to spend an average of $704.18 on holiday gifts and seasonal merchandise, down slightly from $718.98 recorded in 2010, as the majority of Americans said the economy will affect their spending (62.2%).

To mitigate this, 5.7% said they more frequently would turn to their mobile device to do some comparison shopping, up from 3.7% in 2010, and nearly one-third (32.1%) will comparative shop online more often, up from 30.9% last year.

Comparison shopping via smartphones and tablets also is a big trend this year, with 52.6% of smartphone owners and 70.5% of tablet owners saying they would use their device to research products. Specifically, the survey found that:

31% of smartphone owners and 50.8% of tablet owners said they will research products and/or compare prices;

14.1% of smartphone owners and 34.8% of tablet owners will purchase products;

17.3% of smartphone owners and 21.5% of tablet owners will redeem coupons;

15.6% of smartphone owners and 21% of tablet owners will use mobile apps to research or purchase items; and

About one-quarter of smartphone owners (25.1%) and more than one-third of tablet owners (33.8%) will use their devices to look up retailer information, such as store hours and location.

When it comes to mobile shopping, retailers should expect their biggest wins from adults ages 18 to 24 years, NRF said, noting that Americans in this demographic are the most likely to use their smartphones (72.2%) and tablets (86.4%) to shop for holiday items this year.

“When it comes to retail growth this holiday season, slow and steady wins the race — and the same is true for shoppers, who are meticulously calculating the best ways to stretch their dollar,” NRF president and CEO Matthew Shay said. “Knowing their customers are more focused than ever on value, retailers will entice shoppers with promotions that go beyond discounts, whether they’re promoting free gifts with purchase, an extended warranty, or stellar customer service.”

The survey polled 8,585 consumers between Oct. 4 and Oct. 11.

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Supervalu outlook cautious even as profits improve

BY CSA STAFF

EDEN PRAIRIE, Minn. — Supervalu reduced it full-year profit forecast Wednesday morning, even though the company reported better-than-expected second-quarter sales and profits as a result of strategies president and CEO Craig Herkert said are yielding results.

“Our eight plays to win strategy is gaining traction, and we remain on plan with our business transformation,” Herkert said. “Increased discipline and analytical tools are helping to advance hyper local retailing initiatives, which are starting to have a positive impact on our customers’ shopping experience.”

Even so, Herkert tempered his outlook for the remainder of the year by tightening the full-year earnings per share forecast to a range of $1.20 to $1.30, down from a range of $1.20 to $1.40 that was provided at the end of the fourth quarter and reaffirmed at the end of the first quarter.

“While I am encouraged by our execution, I remain mindful of the challenging economy and its impact on consumer behavior. As we move into the second half of our fiscal year, Supervalu remains focused on its strategy and meeting the needs of its customers.”

During the second quarter ended Sept. 10, Supervalu reported earnings per share of 28 cents, much better than the 21 cents a share analysts forecast and vastly superior to the prior-year second-quarter loss of $6.94 cents a share that was driven by a $1.6 billion a goodwill and intangible asset impairment charge.

While the profit performance looked good, sales growth was muted. Total sales declined slightly to approximately $8.4 billion from $8.6 billion while sales at the company’s food retailing division declined to approximately $6.6 billion from $6.7 billion. The sales decline was caused by the exit from several markets and a 1.8 percent drop in identical store sales. Also impacting total company sales was a decline in the company’s independent business sales group which dropped to $1.8 billion from $2 billion and was primarily attributed to Target’s transition to self-distribution and the sale of Total Logistic Control in the fourth quarter.

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