Exhibit 99.1
FOR RELEASE: September 21, 1995 CONTACT: Kris Sundberg
612 828 4441
SUPERVALU INC. REPORTS SECOND QUARTER RESULTS
MINNEAPOLIS, MN SEPTEMBER 21, 1995 -- SUPERVALU INC. today reported improved
second quarter operating results for the 12-week period ended September 9, 1995.
Sales of $3.8 billion for the second quarter were even with the prior year. Net
earnings were $33.3 million compared with $33.5 million last year, and earnings
per share were $0.49 versus $0.47. After-tax expenses incurred in connection
with the company's wholesale realignment, called the ADVANTAGE project, were
$3.1 million in this year's second quarter and $1.7 million last year. Net
earnings on an operating basis for the quarter increased 4.5 percent to $35.5
million versus $34.0 million last year when excluding the ADVANTAGE expenses and
the decreased earnings contribution from ShopKo.
"We are very satisfied with these financial results considering the enormity of
the changes we have undertaken with the ADVANTAGE project and the increased
spending necessary to implement that project," said Mike Wright, SUPERVALU
chairman, president and CEO. "Though it is too early to expect an earnings
contribution from ADVANTAGE, preliminary test results of portions of the project
clearly indicate that we are on the right course to turn industry changes to our
competitive advantage. The customers participating in the testing are equally
enthused and look forward to adopting the full ADVANTAGE program."
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Net sales for the first half (28 weeks) were $8.8 billion compared with last
year's $8.8 billion. Net earnings were $79.2 million or $1.15 per share. Last
year the company earned $84.1 million or $1.18 per share for the same period.
Earnings were impacted primarily by expenses related to the ADVANTAGE project,
higher net interest expense, and flat sales. ShopKo's contribution decreased as
a result of generally soft sales and lower gross margins from promotional
spending designed to boost sales as well as competitive pressures on pricing.
Sales in the food distribution segment were $3.4 billion in the quarter compared
with $3.4 billion in the same period last year. Sales were affected by the
continuing impact from last year's facility consolidations and the soft retail
environment. Food price inflation as measured by the company was nearly 1
percent. Operating earnings in food distribution were $78.5 million compared
with $78.8 million in last year's second quarter.
ADVANTAGE expenses for the quarter of $4.0 million were charged to the food
distribution segment while $1.0 million were charged to unallocated corporate
expenses. Last year, however, ADVANTAGE expenses of $2.9 million were reported
in unallocated corporate expenses. Excluding these ADVANTAGE expenses, earnings
in the distribution segment would have increased 4.7 percent from $78.8 million
to $82.5 million.
Sales for the company's retail food operations were up 11.5 percent to $1.0
billion versus $904 million in last year's second quarter. These results are
due primarily to the 7-store bigg's acquisition in August 1994, new store
openings, and a 2 percent increase in same-store sales.
Operating earnings for the retail food operations were $10.5 million compared
with
$6.6 million last year. These results were affected principally by the bigg's
acquisition and the elimination of operating losses from the closing of
underperforming stores.
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"As this retail restructuring phase is completed we expect a continuation of
improved operating results. This will also allow more focus on implementation
of our strategy to substantially expand our growth formats," said Wright. At
quarter end, SUPERVALU operated 291 stores principally under the names Cub
Foods, Shop 'n Save, Save-A-Lot, bigg's, Scott's Foods and Laneco.
The company also continues to purchase treasury stock as authorized in December
1994 by the board of directors. The current authorization covers 5 million
shares; over 3.6 million shares have been repurchased. These purchases are
being funded by the disposition of surplus real estate and unproductive assets.
SUPERVALU is one of the nation's leading food distributors and the 12th largest
food retailer in the nation. As of September 9, 1995, the company served
independent retailers in 48 states and operated retail food stores in 29 states.
- - 30 -
CONSOLIDATED STATEMENTS OF EARNINGS
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SUPERVALU INC. and Subsidiaries
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(In thousands, except per share data)
Quarter-to-date (12 Weeks) Ended Year-to-Date (28 Weeks) Ended
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Sept. 9, 1995 Sept. 10, 1994 Sept. 9, 1995 Sept. 10, 1994
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Net sales $3,779,397 $3,773,725 $8,752,434 $8,764,840
Costs and expenses:
Cost of sales 3,427,689 3,437,488 7,940,385 7,990,435
Selling and administrative expenses 265,350 255,301 609,946 577,253
Amortization of goodwill 4,053 3,464 9,510 7,689
Interest
Interest expense 32,771 29,658 76,890 67,955
Interest income 4,503 5,792 11,595 13,447
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Interest expense, net 28,268 23,866 65,295 54,508
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Total costs and expenses 3,725,360 3,720,119 8,625,136 8,629,885
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Earnings before equity in earnings
of ShopKo and income taxes 54,037 53,606 127,298 134,955
Equity in earnings of ShopKo 861 1,282 3,329 3,575
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Earnings before income taxes 54,898 54,888 130,627 138,530
Provision for income taxes 21,620 21,373 51,398 54,402
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Net earnings $ 33,278 $ 33,515 $ 79,229 $ 84,128
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Net earnings per common share $ 0.49 $ 0.47 $ 1.15 $ 1.18
Weighted average number of common
shares outstanding 68,181 71,471 68,795 71,563
Dividends declared per common share $ 0.245 $ 0.235 $ 0.480 $ 0.455
Supplemental information:
After-tax LIFO (expense) $ (2,525) $ (3,121) $ (2,317) $ (1,412)
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)
Second Quarter (12 weeks) Ended Year-to-date (28 weeks) Ended
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Net sales Sept. 9, 1995 Sept. 10, 1994 Sept. 9, 1995 Sept. 10, 1994
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Food distribution $3,362,238 $3,400,992 $7,808,365 $7,934,901
89.0 % 90.1 % 89.2 % 90.5 %
Retail food 1,008,391 904,063 2,269,280 2,035,174
26.6 % 24.0 % 25.9 % 23.2 %
Sales eliminations (591,232) (531,330) (1,325,211) (1,205,235)
(15.6)% (14.1)% (15.1)% (13.7)%
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Total net sales $3,779,397 $3,773,725 $8,752,434 $8,764,840
100.0 % 100.0 % 100.0 % 100.0 %
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Earnings
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Food distribution $78,513 $78,830 $179,900 $183,323
88.2 % 92.3 % 87.2 % 88.8 %
Retail food 10,526 6,587 26,342 23,143
11.8 % 7.7 % 12.8 % 11.2 %
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Total operating earnings 89,039 85,417 206,242 206,466
100.0 % 100.0 % 100.0 % 100.0 %
Interest income 4,503 5,792 11,595 13,447
Interest expense (32,771) (29,658) (76,890) (67,955)
General corporate expenses (6,734) (7,945) (13,649) (17,003)
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Earnings before equity in earnings
of ShopKo and income taxes 54,037 53,606 127,298 134,955
Equity in earnings of ShopKo 861 1,282 3,329 3,575
Provision for income taxes (21,620) (21,373) (51,398) (54,402)
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Net earnings $33,278 $33,515 $79,229 $84,128
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Pretax LIFO (expense) ($4,192) ($5,180) ($3,846) ($2,344)