Exhibit 99.1
SUPERVALU Reports Record Third Quarter Earnings;
Company Also Updates Full Year Guidance
MINNEAPOLIS--(BUSINESS WIRE)--Jan. 10, 2006--SUPERVALU INC.
(NYSE:SVU) today reported record results for the third quarter of
fiscal 2006, which ended December 3, 2005. The company reported net
sales of $4.7 billion compared to $4.6 billion last year, net earnings
of $75.2 million compared to $64.9 million, basic earnings per share
of $0.55 compared to $0.48, and diluted earnings per share of $0.53
compared to $0.46. Third quarter results include net after tax charges
of approximately $6.4 million or $0.04 per diluted share related to
growth initiatives and costs related to terminated acquisition
activities. Last year's third quarter results include net after tax
restructure and other charges of approximately $12.8 million or $0.09
per diluted share primarily related to increased liabilities
associated with employee benefit related costs from previously exited
distribution facilities, as well as changes in estimates on exited
real estate.
Jeff Noddle, SUPERVALU chairman and chief executive officer, said,
"We delivered record earnings performance in the quarter on improved
sales across both business segments. At the same time, we continue to
invest in exciting new initiatives such as produce, supply chain
technology, and the launch of a new natural and organic retail format.
We are confident that these programs lay the groundwork for long term
success."
For the first 40 weeks of fiscal 2006, the company reported net
sales of $15.2 billion compared to $15.0 billion last year, net
earnings of $200.2 million compared to $292.9 million last year, basic
earnings per share of $1.47 compared to $2.17 last year, and diluted
earnings per share of $1.41 compared to $2.06 last year. Results for
the first 40 weeks of fiscal 2006 include after tax charges of $0.37
per diluted share related to the plan to sell 20 Pittsburgh stores,
start-up costs related to growth initiatives, losses incurred from
Hurricane Katrina and costs related to terminated acquisition
activities. Results for the first 40 weeks of fiscal 2005 include a
net after tax gain of $68.3 million or $0.47 per diluted share from
the sale of the company's minority interest in WinCo Foods, Inc. and
after tax charges of $16.6 million or $0.12 per diluted share for
restructure and other charges related to increased liabilities
associated with employee benefit related costs from previously exited
distribution facilities, as well as changes in estimates on exited
real estate.
Segment Results
Retail Food Segment - Third quarter retail net sales were $2.5
billion, a 1.9 percent increase compared to last year's third quarter.
Sales performance primarily reflects new store openings partially
offset by the impact of higher store closings, primarily at
Save-A-Lot. Comparable store sales growth for the quarter was negative
0.9 percent, with positive comparable store sales at company-operated
Save-A-Lot stores. When adjusted for planned in-market store
expansion, third quarter comparable store sales were negative 0.5
percent. Absent store closures, sales to Save-A-Lot licensed stores
improved from the prior year. Total retail square footage, including
licensed stores, increased by approximately 1.5 percent from last
year's third quarter, with Save-A-Lot's total square footage
essentially flat compared to the prior year.
Reported retail operating earnings for the third quarter were a
record $104.5 million compared to $101.3 million in last year's third
quarter. Reported operating earnings as a percent of sales were 4.2
percent, essentially flat versus last year's third quarter, reflecting
benefits of merchandising programs offset by soft sales and higher
expenses primarily utilities and bank fees.
New store activity since last year's third quarter, including
licensed stores, resulted in 54 new stores, opened and acquired, and
47 store closings for a total of 7 net new store openings. During the
last 12 months, new store openings include 43 extreme value stores and
11 regional banner stores. Store closings for the last 12 months
include 44 extreme value stores and 3 regional banner stores. As of
December 3, 2005, Save-A-Lot, including licensed stores, operated
1,277 stores, of which 500 stores were combination stores compared to
441 combination stores at the end of last year's third quarter.
For the first 40 weeks of fiscal 2006, SUPERVALU's retail segment
reported net sales of $8.1 billion compared to $8.0 billion last year
and operating earnings of $271.0 million, compared to $335.3 million
last year. Fiscal 2006 operating earnings include pretax charges of
approximately $62 million related to the plan to sell 20 Pittsburgh
stores and losses incurred from the impact of Hurricane Katrina.
Supply Chain Services Segment - Third quarter net sales for supply
chain services were $2.2 billion, an increase of 4.4 percent from last
year's third quarter. The sales increase primarily reflects the
third-party logistics service business acquired in February of 2005
and new business growth that offset customer attrition.
Reported supply chain services operating earnings for the third
quarter were $53.9 million compared to $59.5 million in last year's
third quarter. Reported operating earnings as a percent of sales were
2.4 percent compared to 2.8 percent in last year's third quarter,
primarily reflecting the approximately $5.5 million pretax of start-up
costs associated with technology investments and new produce
initiatives.
For the first 40 weeks of fiscal 2006, SUPERVALU's supply chain
services segment reported net sales of $7.1 billion, compared to $7.0
billion last year. Reported operating earnings were $173.0 million,
compared to $175.2 million last year. Fiscal 2006 includes the
acquisition of the third party logistics business in February of 2005
and pretax start up costs of approximately $21 million relating to
growth initiatives.
Outlook
SUPERVALU's fiscal 2006 outlook includes the following business
assumptions:
-- Consumer spending will continue to be pressured by higher fuel
prices and modest food inflation;
-- Comparable store sales, when adjusted for planned in-market
store expansion, are projected to be approximately flat for
the remainder of the year;
-- Store development plans for the year, including licensee
stores, are projected to be approximately 55 to 60 extreme
value stores and approximately 12 new regional banner stores.
Regional banner major and minor remodels are estimated at
approximately 25 stores. Total store closings for the year are
projected to be approximately 65 stores, primarily Save-A-Lot
stores as well as the stores associated with the plan to sell
its Pittsburgh stores;
-- Sales attrition in the traditional food distribution business
will approximate four percent for the remainder of the year;
-- Total capital spending for the year is projected to be
approximately $350 to $375 million, including approximately
$45 million in capital leases;
-- The fiscal 2006 effective tax rate is estimated to be 37
percent;
-- Zero Zone, a refrigeration case and system manufacturer, will
be divested in fiscal 2006 as it is non-core to the company's
food retail and supply chain service businesses. Zero Zone was
acquired February 7, 2005, in conjunction with the company's
acquisition of Total Logistics, Inc.; and
-- Additional costs associated with the plan to sell its
Pittsburgh stores in the fourth quarter of fiscal 2006 will be
approximately $0.05 per diluted share.
SUPERVALU's fiscal 2006 outlook for basic earnings per share is a
range of $1.98 to $2.03 and a diluted earnings per share range of
$1.89 to $1.94. Both the basic and diluted earnings per share ranges
include after-tax charges of $0.43 per share primarily related to the
plan to sell 20 Pittsburgh stores, start-up costs related to growth
initiatives, losses incurred from Hurricane Katrina, and costs related
to terminated acquisition activities. Fiscal 2005 diluted earnings per
share was $2.71 which includes a net after tax gain of $68.3 million
or $0.47 per diluted share gain on the sale of WinCo. and a net after
tax cost of $16.6 million or $0.12 per diluted share for restructure
and other charges related to increased liabilities associated with
employee benefit related costs from previously exited distribution
facilities, as well as changes in estimates on exited real estate.
Noddle added, "SUPERVALU will continue to transform itself with
exciting and bold programs such as our new small box, natural and
organic retail format, Sunflower Market, - as well as the systemwide
rollout of the Nature's Best private label, the application of
innovative technologies for supply chain efficiency, and the ramp up
of our new W. Newell & Co produce business. These programs will
differentiate SUPERVALU in the grocery food channel and position us
for continued success."
Other Items
General corporate expense for the third quarter was $13.8 million
including approximately $4.5 million of costs related to terminated
acquisition activities. Net interest expense during the third quarter
was $23.1 million compared to $23.9 million last year.
Cash on hand at the end of the third quarter was approximately
$569 million, up from $464 million at fiscal year end, reflecting cash
flow from operations and timing of capital spending projects. The
effective tax rate for the third quarter was 37 percent.
Capital spending during the quarter was $78.7 million, primarily
funding retail store expansion, store remodeling and supply chain
initiatives.
Total debt to capital was 37.9 percent at the end of the third
quarter compared to 40.1 percent at fiscal 2005 year-end. The total
debt to capital ratio is calculated as total debt, which includes
notes payable, current debt and obligations under capital leases,
long-term debt and obligations under capital leases, divided by the
sum of total debt and total stockholders' equity.
Diluted weighted average shares outstanding in the quarter were
145.5 million shares reflecting the 7.8 million shares under the
company's outstanding contingently convertible debentures. As of
December 3, 2005, SUPERVALU had 136.2 million shares outstanding.
A conference call to review the third quarter results is scheduled
for today at 9:00 a.m. (CDT). A live Web cast of the call will be
available at www.supervalu.com. An archive of the call is accessible
via telephone by dialing (630) 652-3041 with passcode 13419604 and
through the company's Web site at www.supervalu.com. The conference
call archive will be available through January 24, 2006.
As of December 3, 2005 SUPERVALU's retail store network consists
of 1,546 stores in 40 states, including 1,277 extreme value stores,
(287 corporate-owned Save-A-Lot stores, 852 licensed Save-A-Lot
stores, and 138 Deals stores); and 269 regional banner stores (Cub
Foods, Shop 'n Save, Shoppers Food & Pharmacy, bigg's, Farm Fresh,
Scott's Foods and Hornbacher's stores). SUPERVALU serves as primary
supplier to approximately 2,200 stores and SUPERVALU's own regional
banner store network of 269 stores.
Celebrating its 135th year of fresh thinking, SUPERVALU INC., a
Fortune 500 company, is one of the largest companies in the United
States grocery channel. With annual revenues of approximately $20
billion, SUPERVALU holds leading market share positions across the
U.S. with its 1,546 retail grocery locations, including licensed
Save-A-Lot locations. With its Save-A-Lot format, the company holds
the number one market position in the extreme value grocery retail
sector. Through SUPERVALU's geographically diverse supply chain
network, the company provides distribution and related logistics
support services to grocery retailers across the nation. In addition,
SUPERVALU's third-party logistics business provides end-to-end supply
chain management solutions that deliver value for manufacturers,
consumer products retailers and food service customers. SUPERVALU
currently has approximately 57,000 employees. For more information
about SUPERVALU visit www.supervalu.com.
The statements contained in this news release that are not
historical fact are forward-looking statements and are made under the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Certain important factors could cause results to differ
materially from those anticipated by such forward-looking statements,
including the company's ability to dispose of its Pittsburgh stores as
planned, the impact of natural disasters on local and regional
markets, transportation systems and the company's customers, the
impact of competition, the nature and extent of the consolidation of
the retail food and food distribution industries, the ability to
attract and retain customers for the company's supply chain services
operations and to control food distribution costs, the ability of the
company to grow through acquisitions and assimilate the acquired
entities, increases in employee benefit costs, potential work
disruptions from labor disputes or national emergencies, the
availability of favorable credit and trade terms, food and fuel price
changes, general economic or political conditions that affect consumer
buying habits generally or war-time activities, threats or general
acts of terror directed at the food industry that affect consumer
behavior, other risk factors inherent in the supply chain services
business and retail businesses, and other factors discussed from time
to time in reports filed by the company with the Securities and
Exchange Commission.
SUPERVALU INC. and Subsidiaries
Consolidated Composition of Net Sales and Operating Earnings
The following table sets forth the composition of the company's net
sales and earnings.
(In thousands)
Third Quarter (12 weeks ended)
Dec. 3, 2005 Dec. 4, 2004
------------------------------------ ------------------------------
Net sales (unaudited)
------------------------------------ ------------------------------
Retail Food $2,476,474 $2,430,240
% of total 52.7 % 53.4 %
Supply Chain Services 2,218,513 2,124,882
% of total 47.3 % 46.6 %
Total net sales $4,694,987 $4,555,122
100.0 % 100.0 %
------------------------------------ ------------------------------
Earnings
------------------------------------ ------------------------------
Retail Food operating earnings $104,474 $101,260
% of sales 4.2 % 4.2 %
Supply Chain Services operating
earnings 53,959 59,546
% of sales 2.4 % 2.8 %
------------------------------
Subtotal 158,433 160,806
% of sales 3.4 % 3.5 %
General corporate expense (13,793) (13,557)
Restructure and other charges (2,199) (20,276)
------------------------------
Total operating earnings 142,441 126,973
% of sales 3.1 % 2.8 %
Interest expense, net (23,089) (23,889)
Earnings before income taxes 119,352 103,084
Income tax expense (44,160) (38,141)
------------------------------
Net earnings $75,192 $64,943
==================================== ==============================
NOTE 1:
Pretax LIFO expense $2,605 $1,389
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $49,786 $47,657
Supply Chain Services Segment 21,933 21,978
General Corporate 28 50
--------------- --------------
Total Company $71,747 $69,685
=============== ==============
SUPERVALU INC. and Subsidiaries
Consolidated Composition of Net Sales and Operating Earnings
The following table sets forth the composition of the company's net
sales and earnings.
(In thousands)
Year-to-date (40 weeks) ended
Dec. 3, 2005 Dec. 4, 2004
------------------------------------ -----------------------------
Net sales (unaudited)
------------------------------------ -----------------------------
Retail Food $8,107,060 $7,995,610
% of total 53.3 % 53.5 %
Supply Chain Services 7,116,435 6,957,124
% of total 46.7 % 46.5 %
Total net sales $15,223,495 $14,952,734
100.0 % 100.0 %
------------------------------------ -----------------------------
Earnings
------------------------------------ -----------------------------
Retail Food operating earnings $271,015 $335,321
% of sales 3.3 % 4.2 %
Supply Chain Services operating
earnings 173,005 175,194
% of sales 2.4 % 2.5 %
-----------------------------
Subtotal 444,020 510,515
% of sales 2.9 % 3.4 %
General corporate expense (38,927) (36,421)
Gain on sale of WinCo Foods, Inc. - 109,238
Restructure and other charges (3,369) (26,416)
-----------------------------
Total operating earnings 401,724 556,916
% of sales 2.7 % 3.7 %
Interest expense, net (83,999) (91,144)
Earnings before income taxes 317,725 465,772
Income tax expense (117,558) (172,882)
-----------------------------
Net earnings $200,167 $292,890
==================================== =============================
NOTE 1:
Pretax LIFO expense $6,859 $7,033
NOTE 2:
Pretax depreciation and amortization
Retail Food Segment $164,542 $156,605
Supply Chain Services Segment 73,871 75,531
General Corporate 483 521
--------------- -------------
Total Company $238,896 $232,657
=============== =============
CONSOLIDATED STATEMENTS OF EARNINGS
- ----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- ----------------------------------------------------------------------
(In thousands, except
per share data)
Third Quarter (12 weeks ended)
Dec. 3, 2005 % of sales Dec. 4, 2004 % of sales
- --------------------- ------------------------------------------------
(unaudited)
------------------------------------------------
Net sales $4,694,987 100.0% $4,555,122 100.0%
Costs and expenses:
Cost of sales 4,022,788 85.7% 3,894,925 85.5%
Selling and
administrative
expenses 527,559 11.2% 512,948 11.3%
Restructure and other
charges 2,199 0.0% 20,276 0.4%
------------------------------------------------
Operating earnings 142,441 3.1% 126,973 2.8%
Interest expense, net 23,089 0.5% 23,889 0.5%
------------------------------------------------
Earnings before
income taxes 119,352 2.6% 103,084 2.3%
Provision for Income
taxes 44,160 1.0% 38,141 0.9%
------------------------------------------------
Net earnings $75,192 1.6% $64,943 1.4%
================================================
Weighted average
number of common
shares outstanding
Basic 136,199 134,343
Diluted 145,549 144,058
Net earnings per
common share - basic $0.55 $0.48
Net earnings per
common share -
diluted $0.53 $0.46
Dividends declared
per common share $0.1625 $0.1525
CONSOLIDATED STATEMENTS OF EARNINGS
- ----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- ----------------------------------------------------------------------
(In thousands, except
per share data)
Year-to-date (40 weeks) ended
Dec. 3, 2005 % of sales Dec. 4, 2004 % of sales
- --------------------- ------------------------------------------------
(unaudited)
------------------------------------------------
Net sales $15,223,495 100.0% $14,952,734 100.0%
Costs and expenses:
Cost of sales 13,020,757 85.5% 12,792,362 85.5%
Selling and
administrative
expenses 1,797,645 11.8% 1,686,278 11.3%
Gain on sale WinCo
Foods, Inc. - 0.0% (109,238) -0.7%
Restructure and other
charges 3,369 0.0% 26,416 0.2%
------------------------------------------------
Operating earnings 401,724 2.7% 556,916 3.7%
Interest expense, net 83,999 0.6% 91,144 0.6%
------------------------------------------------
Earnings before
income taxes 317,725 2.1% 465,772 3.1%
Income tax expense 117,558 0.8% 172,882 1.2%
------------------------------------------------
Net earnings $200,167 1.3% $292,890 1.9%
================================================
Weighted average
number of common
shares outstanding
Basic 136,007 134,970
Diluted 145,684 144,833
Net earnings per
common share - basic $1.47 $2.17
Net earnings per
common share -
diluted $1.41 $2.06
Dividends declared
per common share $0.4775 $0.4500
CONDENSED CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------
SUPERVALU INC. and Subsidiaries
- ----------------------------------------------------------------------
(In thousands)
Third Quarter Fiscal
(unaudited) Year End
--------------------------
Dec. 3, February 26,
2005 2005
- ----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $569,238 $463,915
Receivables, net 460,660 464,249
Inventories, net 1,236,398 1,032,034
Other current assets 129,441 161,922
Total current assets 2,395,737 2,122,120
Long-term receivables, net 80,898 88,551
Property, plant and equipment, net 2,118,429 2,190,888
Goodwill & Other Long Term Assets 1,881,054 1,872,403
--------------------------
Total assets $6,476,118 $6,273,962
======================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $1,236,013 $1,106,860
Current debt and obligations under
capital leases 124,557 99,463
Other current liabilities 444,996 420,888
--------------------------
Total current liabilities 1,805,566 1,627,211
Long-term debt and obligations under
capital leases 1,495,889 1,578,867
Other liabilities and deferred income taxes 518,244 557,323
Total stockholders' equity 2,656,419 2,510,561
--------------------------
Total liabilities and stockholders' equity $6,476,118 $6,273,962
======================================================================
CONTACT: SUPERVALU INC., Minneapolis
INVESTORS:
Yolanda Scharton, 952-828-4540
yolanda.scharton@supervalu.com
or
MEDIA:
Haley Meyer, 952-828-4786
haley.meyer@supervalu.com