(Source: Associated Press/AP Online)
MINNEAPOLIS - Grocery chain Supervalu says the recession is still hurting its bottom line as food prices remained low, stores closed and strained customers continued to pare spending despite deep discounting.
The operator of Albertsons, Jewel-Osco and Save-A-Lot stores has been hurt in recent quarters as competition has heated up during the recession for shoppers who are cutting their spending on even essentials such as food.
Supervalu Inc. reported Tuesday that its fiscal second-quarter profit tumbled 42 percent. The company said quarterly earnings amounted to $74 million, or 35 cents per share, down from $128 million, or 60 cents per share, in the same quarter last year.
Revenue fell 7.5 percent to $9.46 billion.
Supervalu's new CEO Craig Herkert said he expected a lower second-quarter profit.
"Consumer purchasing behavior, deflationary pressures, as well as our decision to make meaningful investments in price and promotions significantly impacted our second quarter sales and margins," he said.
"As we move into the last half of the year, we will place intense focus on in-store execution and merchandising programs," he added.
The results beat analyst expectations. Analysts polled by Thomson Reuters expected the company to earn 33 cents per share on revenue of $9.65 billion for the quarter.
The Minneapolis-based company said during its last quarter that pressures such as weak consumer spending, falling food prices and increasing competition were not likely to abate soon and lowered its earnings expectations for the year.
Herkert, a former Wal-Mart Stores Inc. executive, at that time laid out more aggressive plans for the company - such as selling stores and further driving down prices to draw shoppers.
Looking ahead to 2010, Herkert predicted the recession will continue to take its toll. Herkert expects continued customer spending constraints and a 4 percent decline in sales at stores open at least one year. The company cut the top of his previous 2010 earnings outlook to a range between $1.95 per share and $2.05 per share, compared with an earlier estimate between $1.95 per share and $2.15 per share.
Shares of Supervalu fell 43 cents, or 2.5 percent, to $16.50 in premarket trading.
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