Distribution and Retailing
SUPERVALU
News Release
FOR RELEASE: June 29, 1994 CONTACT: Kris Sundberg
612 828-4441
SUPERVALU REPORTS FIRST QUARTER RESULTS
AT COMPANY'S ANNUAL SHAREHOLDER MEETING
MINNEAPOLIS -- Citing substantial progress in corporate retail performance
and integration and consolidation of distribution operations, SUPERVALU INC.
today at its annual stockholders meeting reported sales of $5.0 billion for
its first quarter ended June 18, 1994. This represents a 2.4 percent increase
over the $4.9 billion first quarter sales of one year ago. Net earnings were
$51 million or $.71 per share for the quarter, even with last year's results.
"These are very reasonable results, considering the first quarter
consolidation and acquisition costs and other investments for our future," said
Michael W. Wright, SUPERVALU chairman, president and CEO. External factors
affecting company performance include food price deflation, higher Federal tax
rates, and somewhat weak results form ShopKo. Food inflation for the quarter
as measured by the company was negative 0.8 percent.
"We should begin to show improved results in the latter half of the year,"
Wright added, "after the costs of integration and consolidation, customer
changes and the sales impact of cigarette price cuts by manufacturers are
completely cycled out from the previous fiscal year."
"We continue our aggressive wholesale consolidation efforts, evidenced by the
recently announced closing of the company's Northboro, MA distribution
facility acquired with Sweet Life Foods in March of this year," Wright stated.
The wholesale grocery volume will be transferred to the Andover, MA facility,
he said. Wright added that facilities consolidation, which began last year,
offers excellent potential to increase operating efficiency and buying
advantage, build volume and leverage fixed expenses.
-MORE-
Food distribution sales were $4.5 billion, up 2.0 percent over last year. "The
first quarter acquisition of Sweet Life Foods contributed to sales growth,
helping to offset negative food deflation, a tough retail environment and the
usual sales impact when consolidating facilities," Wright said. Food
distribution operating earnings decreased 3.5 percent principally resulting
from consolidations, acquisitions completed in the quarter and reduced LIFO
income. Wright said that, "Although these investments to improve our buying
leverage, efficiencies of scale and operating productivity have short-term
costs, they are imperative to build our competitive edge for future growth."
Retail food sales were $1.1 billion, up 6.9 percent over last year. "We are
very pleased with our corporate retail progress. It further validates our
strategy to grow the retail segment of our business," Wright said. Same-store
corporate retail sales showed healthy improvement by remaining even overall,
reversing a negative trend from previous quarters. Retail food operations
profits more than doubled, with Cub Foods, Shop 'n Save and the Scott's
divisions producing excellent results, despite increasing competition in
certain markets. At quarter-end, SUPERVALU operated 295 retail food stores
principally under the Cub, Save-A-Lot, Shop 'n Save, Scott's Foods, Laneco,
Hornbachers, MAX CLUB and Twin Valu names.
Earlier the company announced fiscal 1995 budget plans to add up to nine
corporate Cub Foods stores and seven franchised stores in the current fiscal
year. Save-A-Lot plans to add a total of 20 corporate-owned and 85 licensed
stores this year.
In addition, the Save-A-Lot division completed in May the acquisition of 30
Texas T stores located in the Dallas-Ft. Worth market. These stores are being
converted to the Save-A-Lot limited-assortment format over the next several
months. The acquired Texas T distribution center will also help reduce
distribution costs for existing customers in the Texas, Louisiana and Arkansas
markets.
At the annual meeting four directors were re-elected and one new director was
elected to the 12-member SUPERVALU board. Re-elected to three-year board terms
were Vernon H. Heath, retired chairman of the board of Rosemount, Inc.,
Minneapolis; William A. Hodder, chairman, president, CEO and a director of
Donaldson Company, Inc., Minneapolis; Harriet Perlmutter, businesswoman; and
Winston R. Wallin, chairman of the board and a director of Medtronic, Inc.,
Minneapolis. Newly elected for a two-year term is R.L. (Dick) Knowlton,
chairman of the board of Austin, MN-based Hormel Foods since 1984. Knowlton
was also president and CEO of that company from 1984 to 1992. He serves on the
boards of Northwestern National Life Insurance Co. and First Bank System and
is a member of the board of trustees for the Mayo Foundation.
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CONSOLIDATED STATEMENTS OF EARNINGS
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SUPERVALU INC. and Subsidiaries
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(in thousands, except per share data)
First Quarter (16 Weeks) Ended
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June 18, 1994 June 19, 1993
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Net sales $4,991,115 $4,875,784
Costs and expenses:
Cost of sales 4,552,947 4,457,422
Selling and administrative expenses 321,952 307,143
Amortization of goodwill 4,225 3,620
Interest
Interest expense 38,297 38,371
Interest income 7,655 9,074
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Interest expense, net 30,642 29,297
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Total costs and expenses 4,909,766 4,797,482
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Earnings before equity in earnings
of ShopKo and income taxes 81,349 78,302
Equity in earnings of ShopKo 2,293 2,633
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Earnings before income taxes 83,642 80,935
Provision for income taxes 33,029 29,851
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Net earnings $50,613 $51,084
===========================
Net earnings per common share $.71 $.71
Weighted average number of common
shares outstanding 71,633 71,583
Dividends declared per common share $0.220 $0.195
Supplemental information:
After-tax LIFO income $1,709 $2,734
SUPERVALU INC. and Subsidiaries
Composition of Net Sales and Earnings
The following table sets forth the composition of the company's net sales and
earnings.
(In thousands, except percent data)
First Quarter (16 weeks) Ended
--------------------------------------
Net sales June 18, 1994 June 19, 1993
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Food distribution $4,533,909 $4,446,654
90.8 % 91.2 %
Retail food 1,131,111 1,057,943
22.7 % 21.7 %
Sales eliminations (673,905) (628,813)
(13.5)% (12.9)%
Total net sales $4,991,115 $4,875,784
100.0 % 100.0 %
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Earnings
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Food distribution $104,493 $108,285
86.3 % 93.5 %
Retail food 16,556 7,539
13.7 % 6.5 %
Total operating earnings 121,049 115,824
100.0 % 100.0 %
Interest income 7,655 9,074
Interest expense (38,297) (38,371)
General corporate expenses (9,058) (8,225)
Earnings before equity in earnings
of ShopKo and income taxes 81,349 78,302
Equity in earnings of ShopKo 2,293 2,633
Provision for income taxes (33,029) (29,851)
Net earnings $50,613 $51,084
===============================================================================
Pretax LIFO income $2,837 $4,467