Struggling SuperValu soars on bullish guidance
Investors are giving the company a second look.
The parent of Acme Markets, Albertson's, Save-A-Lot and Shaw's said that its earnings for the 2013 fiscal year would be $1.27 to $1.42 per share on revenue of $35.0 billion to $35.5 billion. Analysts had expected $1.19 a share on revenue of $35.3 billion. Shares of the Minneapolis company soared 19% at one point in early trading. Unfortunately, the long-term prospects for SuperValu are still lousy.
The company reported a quarterly net loss of $424 million, or $2.00 share, compared with $95 million, or 44 cents, a year earlier. Revenue fell 5% to $8.23 billion. When adjusted for one-time items, earnings were $81 million, or 38 cents per share, beating Wall Street expectations by 3 cents.
SuperValu has been laying off staff and closing poorly performing stores to cut costs. Wall Street should expect more of the same as the company tries to attract to low-income shoppers.
The company is being squeezed by a myriad of competitors on the high and low end, ranging from Kroger (KR) to Target (TGT) to Whole Foods (WFM) -- and it is faring badly. During the fourth quarter, gross profit margin was $1.9 billion, or 22.8% of net sales, compared to $2.0 billion, or 23.3% of net sales, a year ago.
I don't remember the last time I went to the Acme Market that for generations has served the suburban Philadelphia community where I live. Acme markets began in 1891 and are as much a part of the Philadelphia region as soft pretzels, Rocky and the Liberty Bell. Whatever affection people have for Acme -- pronounced by some Philadelphians as ACK-A-Me -- seems to be eroding. A sleek, modern Acme in a neighboring town to mine closed its doors after a Wegman's opened up. The Acme that's closest to my house is not competitive on pricing with Target or Costco (COST) and is a far less appealing place to shop. Its margins will be squeezed even further because Bottom Dollar Food is opening a new location nearby.
About the best that shareholders can hope for is that Supervalu management can improve the company's balance sheet enough so that either a larger rival or a private equity player will want to take them over.
Jonathan Berr is long Target. Follow him on Twitter @jdberr.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.