Minneapolis-based Supervalu, one of the largest US grocers, has warned that its results are subject to a charge of between US$19m to US$21m after tax, due to intentional inventory misstatements by a former employee.
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It is currently in the process of determining whether the total charge to adjust earnings will be taken in the Q1 2003 or result in a restatement of prior years’ consolidated financial statements.
Supervalu is currently conducting a thorough review of the situation with the help of its auditors, the board’s audit committee, and an independent accounting firm. The situation that spanned at least four years is confined to the company’s pharmacy division and resulted in the understatement of cost of goods sold. Sales have been properly reported for all periods.
Jeff Noddle, chairman and CEO, said of the charge: “We are severely displeased that this former employee deliberately violated well-defined policies. We will not tolerate this unacceptable behaviour. We regret that it is necessary to take this charge.”
Preliminary Q1 results
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By GlobalDataThe company also announced preliminary earnings per share for the Q1 2003, ended 15 June, of around US$0.56-US$0.58, prior to the impact of the charge. Wall Street’s consensus earnings per share estimate is US$0.58. Supervalu also reiterated FY earnings per share guidance of US$2.20-US$2.35 excluding that charge. Q1 results are scheduled to be released on 1 July 2002.
Noddle continued: “We are pleased that our preliminary operating results for the Q1 are in line with expectations. Our results continue to reflect the benefits of last year’s business initiatives aimed at growing our retail store network and profitability as well as generating improved efficiencies in distribution.
“This broad-based performance is especially important in today’s sluggish sales environment and modest price deflation in some product categories.
“Comparable retail store sales in the Q1 was basically flat, slightly below our expectations. Nonetheless, our overall results are on track.”
