US: Supervalu to shut "under-performing" stores
By Dean Best | 6 September 2012
- 60 stores to be closed
- Save-a-Lot, Albertsons, Acme among banners affected
- New CEO aiming to reduce costs
US retailer Supervalu, battling to revitalise its business, has decided to close around 60 stores.
Supervalu, which has a network of about 4,400 outlets across the US, said it would shut the "under-performing or non-strategic stores" in its current financial year, which runs until late February.
The stores to be shut include 22 Save-a-Lot locations, 27 Albertsons stores, four Acme outlets and one Jewel-Osco shop.
Supervalu president, CEO and chairman Wayne Sales said the decision showed the retailer was moving "with a greater sense of urgency to reduce costs and improve shareholder value".
Sales became Supervalu chief executive in July, weeks after the retailer booked a decline in first-quarter sales and earnings two months. In its last three full financial years, the retailer has seen gross profit, revenue and identical-stores sales fall.
On his appointment, Sales said Supervalu would look to cut costs "significantly" and "move with urgency in our retail food business to lower prices and create points of sustainable differentiation".
While Sales looks at Supervalu's operational strategy, he is also conducting a "strategic review" of its entire business.
Last month, a Bloomberg report in the US claimed Supervalu's advisers were asking potential buyers to bid for the entire business.
However, sources told Bloomberg several suitors have enquired about individual parts of the group.
Cerberus Capital Management is said to be examining a possible deal involving the retailer's Albertsons unit, Bloomberg said, Ahold has shown interest in the Shoppers chain.
SUPERVALU Announces Decision to Close Underperforming Stores
Closures expected to generate $35 million in cash within 12 months; $80-$90 million expected over next 3 years
Company anticipates closures to result in non-cash charges of $80-$90 million (pre-tax) and gains on sale of departmental assets of approximately $10 million in fiscal 2013
MINNEAPOLIS--(BUSINESS WIRE)--Sep. 5, 2012-- SUPERVALU INC. (NYSE: SVU) today announced it will close approximately 60 underperforming or non-strategic stores this fiscal year including 38 in its retail food reporting segment and 22 Save-A-Lot locations. The majority of the stores are expected to close before December 1, 2012, the end of the Company’s fiscal 2013 third quarter.
“These decisions are never easy because of the impact a store closure has on our team members, our customers, and our communities,” said Wayne Sales, SUPERVALU’s president, chief executive officer, and chairman. “Today’s announcement reflects our commitment to move with a greater sense of urgency to reduce costs and improve shareholder value.”
As a result of the closures, SUPERVALU expects to record a pre-tax charge of $80-$90 million in fiscal 2013, with all but $3 million in estimated severance costs being non-cash. Of these amounts, $50-$55 million is expected in the Company’s fiscal 2013 second quarter (ending September 8, 2012) with the majority of the remainder anticipated to be recorded in its fiscal 2013 third quarter. In addition, a pre-tax gain of approximately $10 million from the sale of departmental assets is expected in fiscal 2013 second quarter.
Over the next three years, the Company estimates that closing these locations will generate between $80- $90 million in cash from monetizing owned real estate, eliminating cash operating losses, and selling departmental assets. The Company owns the real estate for approximately one-third of the retail food stores being closed. Cash generated from these actions will be used to reduce outstanding debt and for other general corporate purposes. These closures will also be accretive to net earnings.
The closures in the retail food segment include 27 Albertsons stores (19 in Southern California, including one previously announced location, and eight in the Intermountain West region), four ACME stores, and one previously announced Jewel-Osco location.
Eight additional stores are included in this announcement but due to ongoing contractual discussions the specific details of each store are not being disclosed at this time. All eight are expected to close by the end of SUPERVALU’s fiscal year which is February 23, 2013.
About SUPERVALU INC.
SUPERVALU INC. is one of the largest companies in the U.S. grocery channel with annual sales of approximately $35 billion. SUPERVALU serves customers across the United States through a network of approximately 4,400 stores composed of 1,101 traditional retail stores, including 798 in-store pharmacies; 1,336 hard discount stores, of which 939 are operated by licensee owners; and 1,950 independent stores serviced primarily by the Company's food distribution business. SUPERVALU has approximately 130,000 employees. For more information about SUPERVALU visit www.supervalu.com.
Original source: Supervalu
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