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MINNEAPOLIS - What a different a huge merger makes. Flexing the muscles of its newly combined company for Wall Street for the first time, Supervalu said its second quarter earnings nearly quadrupled to $132 million, or 61 cents per share, in the three months ended Sept. 9, up from $34 million, or 24 cents per share during the same period last year.
Sales at the beefed up grocer and food distributor also more than doubled, to $10.67 billion, up from $4.56 billion a year ago.
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Noting that the first of four key milestones - "delivering the economic of our new company" - is well on its way to being achieved, Supervalu's chairman and c.e.o. Jeff Noddle told analysts during a conference call Tuesday that the company's results to date "are strong, on track, and demonstrate the power of the newly transformed Supervalu."
Nearly doubling its store count with the acquisition of Albertsons' premiere banners, including Jewel-Osco, Acme Markets, Shaw's and Star Market, immediately added to Supervalu's profits, not counting one-time costs from the acquisition, Noddle said.
For the first six months of the year, Supervalu said it earned $219 million, or $1.21 per share, up from $125 million, or 88 cents per share, during the same period a year ago. Revenue was $16.45 billion, up from $10.53 billion.
Same store sales during the 12-week quarter ended September 9, 2006 were flat, with Supervalu stores down slightly and the new Albertson's stores up slightly.
"The sizable transformation of Supervalu, where retail now accounts for the vast majority of total operating earnings, is apparent in these results," noted Noddle, who reaffirmed his company's leading market share positions in many of the largest cities in the country, thanks to its new status as a coast-to-coast grocery and pharmacy retailer with more than 2,500 stores -- which includes 928 in-store pharmacies across the country.
"We are implementing a sizable capital program and refining both our national and in-store merchandising programs," he said. "At the same time, we are equally committed to capturing efficiencies of our new size, leveraging our supply chain expertise while generating strong cash flow to reduce debt."
For the first half of fiscal 2007, the company reported net sales of $16.4 billion compared to $10.5 billion last year, net earnings of $218.8 million compared to $125.0 million last year, and earnings per share of $1.21 compared to $0.88 last year. First quarter results did not include any operating results from the acquisition.
Second quarter net sales for Supervalu's retail food segment were $8.5 billion vs. $2.4 billion last year. Same store sales growth for retail in the quarter was negative 1.0 percent, the company said. When adjusted for planned in-market store expansion, second quarter identical store sales growth for Supervalu retail was negative 0.6 percent. Starting this quarter, the company said all identical store sales are exclusive of fuel.
Total retail square footage, including acquired stores and licensed stores and excluding the divested stores of Cub Foods Chicago and Shop 'n Save Pittsburgh from the prior year, increased to approximately 86 million square feet, an increase of approximately 185 percent from last year's second quarter.
Meanwhile, retail operating earnings for the second quarter were $360.5 million compared to $39 million last year, an increase that again vividly reflects the Albertsons acquisition. Reported operating earnings as a percent of sales were 4.2 percent vs. 1.6 percent last year.
For the first half of fiscal 2007, Supervalu's retail segment's net sales were $11.5 billion compared to $5.6 billion last year, and operating earnings of $489.1 million compared to $166.5 million last year. Fiscal 2007 first-half retail operating earnings include the benefit of approximately $10 million pre-tax from the sale of a minority partnership interest in two retail stores in the Northwest partially offset by approximately $5.4 million of pre-tax expenses related to stock option expensing. Fiscal 2006 first-half retail operating earnings included pre-tax charges of approximately $62 million related to the plan to sell the Shop 'n Save Pittsburgh stores and losses incurred from Hurricane Katrina.
Net new store activity since last year's second quarter included 707 combination stores, 354 grocery stores and 26 limited assortment grocery stores. As of the end of the second quarter, Supervalu's retail store network of 2,504 stores includes approximately 928 combination stores, 406 grocery stores, and 1,170 limited assortment grocery stores. Included in the total store counts are 118 fuel centers and 867 licensed limited assortment grocery stores.
Supervalu raised its guidance for the full year to a range of $2.18 to $2.41 per share, after lowering it over the summer. Its most recent previous guidance was $2.11 to $2.36 per share. Supervalu said it expects revenue of $37 billion to $38 billion for the year. Analysts were expecting earnings of $2.21 per share on revenue of $36.68 billion to $38 billion.