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MINNEAPOLIS - Citing progress in difficult times, Supervalu Inc. on Thursday reported that its fourth-quarter profit nearly doubled. For the fourth quarter, which ended Feb. 22, the company reported net sales of $4.6 billion compared to $4.5 billion last year, net earnings of $63.9 million compared to $32.8 million last year, and diluted earnings per share of $0.48 compared to $0.24 last year.
The Eden Prairie, Minn.-based grocery wholesaler and retailer said its profit for the year was $257 million, or $1.91 per share, meeting Wall Street's expectations, according to Thomson First Call.
Supervalu is projecting fiscal 2004 earnings in the range of $2 to $2.15 per share.
"Unquestionably, the economy continued to weaken during the year and dealt us a difficult hand. While we did not reach our original goal for the quarter, we stayed true to our long-term strategies and maintained financial flexibility. By reducing planned capital spending and managing working capital requirements, we significantly improved our debt to capital ratio by more than 200 basis points for the year," said chairman and CEO Jeff Noddle.
Noddle noted that same store sales were flat in the fourth quarter on top of last year's positive performance. "During the year we added 157 net retail stores reflecting both organic expansion and the acquisition of Deals. In distribution, we formally launched our new logistics business platform and continued to implement cost savings programs and new technologies. Marking significant progress, in less than one year since launching our general merchandise strategy at Save-A-Lot, we developed new combination store prototypes, introduced 200 popular general merchandise items across our 1,150 store network, converted or opened 35 full combination stores, and continued the expansion of Save-A-Lot's distribution network to support our expanding store base," he said.
On a conference call with analysts Thursday, the topic of Supervalu's rival, Fleming Companies Inc., came up repeatedly. Texas-based Fleming sought Chapter 11 bankruptcy protection last week in a move tied to the loss of $4.5 billion in revenue from Kmart Corp., which itself filed for bankruptcy a year ago.
Noddle acknowledged that the company will try to win over Fleming clients.
Supervalu in some cases would be willing to offer Fleming customers lease guarantees or loans, a common industry practice, Noddle said. It is unlikely, however, that the company would invest in new distribution centers.
Supervalu and Fleming compete for distribution customers in many parts of the United States, but Supervalu has little presence in the Southwest. Given its geographic constraints, it's estimated that Supervalu would potentially have a shot at about $4.2 billion of Fleming distribution business.