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MINNEAPOLIS -- Singling out higher fuel costs, intense competition, and food price inflation, Supervalu, Inc., based here, said its quarterly earnings for the first quarter fell 39 percent to $91.2 million, down from $149.4 million a year earlier. However, net sales increased to $5.97 billion from $5.91 billion.
Retail sales rose a slim 1.7 percent to $3.2 billion, reflecting new regional store openings partially offset by the impact of store closings, primarily Save-A-Lots, as well as a more competitive retail environment, according to the company.
Same-store sales slipped 0.4 percent, reflecting slightly negative same-stores sales at company-operated Save-A-Lots, vs. a 1.8 percent increase in same-store sales a year earlier.
Supevalu's year-ago results also reflect a gain of $68.3 million from the sale of a minority interest in Boise, Idaho-based WinCo Foods, Inc., the impact of which affected the retail segment's operating income by 1 percent.
The company, whose retail network consists of 1,555 stores in 40 states, including 1,287 Save-A-Lots, said sales from its supply chain services were up slightly to $2.8 billion, while operating income at the segment rose 13.4 percent, primarily reflecting the higher-margin logistics services the company offers to third parties.
Jeff Noddle, Supervalu chairman and c.e.o., said, "Overall, we are pleased with our results during the first quarter, which reflect the diversified business mix of our company. Last year we reported a gain in the first quarter on the sale of WinCo," he said, noting that when excluding the gain from last year's results, "We achieved record first-quarter net earnings and diluted earnings per share. We are also affirming our full-year diluted earnings per share guidance for fiscal 2006 of $2.30 to $2.45. Our efforts this year are directed at programs to drive sales performance. We recognize the importance of top-line growth in addition to our return on invested capital goal to leverage the excellent progress we made last year."
Noddle continued: "We remain committed to our strategy, which includes innovative retail merchandising programs and network expansion, and the delivery of best-in-class supply chain services across the grocery retail channel and beyond. The establishment of our new 18 percent return on invested capital goal guides all of our important initiatives across the company."