EXHIBIT 99.1
SUPERVALU Reports Record Second Quarter Fiscal 2008 Earnings
Fifth Consecutive Quarter of Double Digit EPS Growth;
Affirms Fiscal 2008 EPS Guidance
MINNEAPOLIS--(BUSINESS WIRE)--Oct. 16, 2007--SUPERVALU INC.
(NYSE:SVU) today reported record earnings for the second quarter of
fiscal 2008. The company reported second quarter net sales of $10.2
billion compared to $10.7 billion last year, record net earnings of
$148 million compared to $132 million last year, an increase of 12
percent and record diluted earnings per share of $0.69 compared to
$0.61 last year, an increase of 13 percent. Second quarter fiscal 2008
and fiscal 2007 results include charges for one-time acquisition
related costs of $19 million and $16 million or $0.05 and $0.04 per
diluted share, respectively. SUPERVALU's second quarter of fiscal 2008
ended September 8, 2007 and included 12 weeks of combined results
compared to the second quarter of fiscal 2007 which included 13 weeks
of acquired operations. The estimated sales impact of one less week of
acquired operations in the second quarter of fiscal 2008 is
approximately $450 million or approximately $0.03 per diluted share.
When adjusting for the one extra week in the prior year quarter,
diluted earnings per share increased 19 percent. On June 2, 2006,
SUPERVALU completed its $11.4 billion acquisition of Albertson's
premier retail properties, which transformed SUPERVALU into the
nation's third-largest supermarket chain with leading market shares
across the country.
Jeff Noddle, SUPERVALU chairman and chief executive officer said,
"Through the first half of fiscal 2008, we are on track, delivering
the fifth consecutive quarter of double-digit earnings per share
growth on the heels of our record-setting results during fiscal 2007.
In year two of our three-year journey, we are implementing programs to
improve our long-term sales performance and deliver our synergies,
while operating our business from day-to-day. I am pleased to affirm
our fiscal 2008 earnings guidance today, which represents another year
of double-digit earnings per share growth."
Segment Results
Retail Food Segment - Second quarter retail net sales were $8.0
billion, compared to $8.5 billion last year. The sales decrease
reflects one less week of acquired operations, which is estimated at
approximately $450 million. Identical store sales growth, excluding
fuel, for SUPERVALU in the quarter was 0.5 percent. In addition, sales
increases from new stores and positive identical store sales were more
than offset by the previously disclosed closure of underperforming
stores, primarily in the acquired operations. As of September 8, 2007,
SUPERVALU's retail store network of 2,463 stores included
approximately 877 combination stores, 403 food stores, and 1,183
limited assortment food stores. Included in this total are 858
licensed limited assortment food stores. Total owned retail square
footage at the end of the second quarter of fiscal 2008 was
approximately 71 million square feet. Total retail square footage
decreased 3.5% from the second quarter of fiscal 2007. When excluding
store closures, total retail square footage increased 2.4% over the
second quarter of fiscal 2007.
Reported retail operating earnings for the second quarter was $385
million compared to $361 million last year, an increase of 6.7
percent. When adjusting for the one extra week in the prior year
quarter, retail operating earnings increased 13 percent. Reported
retail operating earnings as a percent of sales were 4.8 percent
compared to 4.2 percent last year. The net increase in retail
operating earnings as a percent to sales is from lower
employee-related costs, lower depreciation expense from the recently
completed purchase accounting valuations, and the benefits of
merchandising programs. These were offset in part by store closure
costs.
Supply Chain Services Segment - Second quarter net sales for
supply chain services were $2.2 billion, up approximately 1.8 percent
from last year. The sales increase primarily reflects new business
growth, which was partially offset by normal customer attrition.
Reported supply chain services operating earnings for the second
quarter were $63 million compared to $56 million in last year's second
quarter, an increase of 12 percent. Reported supply chain services
operating earnings as a percent of sales were 2.9 percent compared to
2.6 percent in last year's second quarter. The increase in supply
chain services operating earnings as a percent of sales primarily
reflects lower employee-related costs and operational efficiencies.
Other Items
General corporate expense for the second quarter was $42 million
compared to $26 million last year. The increase from last year
reflects one-time acquisition related costs of approximately $19
million and higher litigation charges. Last year's corporate expense
includes one-time acquisition related costs of approximately $16
million.
Net interest expense for the second quarter was $163 million
compared to $176 million last year reflecting one less week of the
acquired operations, lower debt levels and the benefit of lower
borrowing rates in the quarter.
SUPERVALU's effective tax rate for the second quarter was 39.0
percent in contrast to last year's 38.6 percent, reflecting the
estimated effective tax rate for fiscal 2008.
Capital spending year to date was $511 million, including
approximately $22 million in capital leases. Thirty-five major
remodels and 18 minor remodels have been completed year to date.
Capital spending primarily includes retail store expansion, store
remodeling and supply chain initiatives.
Total debt to capital was 61 percent at the end of the second
quarter compared to 62 percent at the end of the first quarter and 64
percent at fiscal 2007 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 for the second quarter
were 216 million shares compared to 220 million shares last year. The
decrease in weighted average diluted shares is primarily due to the
company's repurchase of convertible debentures in the third quarter of
fiscal 2007. As of September 8, 2007, SUPERVALU had 211 million shares
outstanding.
For the first half of fiscal 2008, the company reported net sales
of $23.5 billion compared to $16.4 billion last year, net earnings of
$296 million compared to $219 million last year, and diluted earnings
per share of $1.37 compared to $1.21 last year. Results for the first
half of fiscal 2008 include charges for one-time acquisition related
costs of $0.13 per diluted share compared to $0.10 of one-time
acquisition related costs last year.
The company affirmed fiscal 2008 guidance.
Diluted Earnings Per Share Summary
Guidance
Fiscal 2008
- ----------------------------------------------------------------------
Reported diluted earnings per share $2.73 to $2.83
One-time acquisition related costs $0.20
- ----------------------------------------------------------------------
Diluted earnings per share before $2.93 to $3.03
one-time costs
Weighted average diluted shares 216 to 218
outstanding (millions)
SUPERVALU's fiscal 2008 outlook includes business assumptions,
such as:
-- Net sales are estimated to be approximately $44 billion;
-- Identical store sales growth excluding fuel for the combined
retail network, as if the acquired operations were in the
store base for more than a year, is projected to be at the low
end of the 1 to 2 percent range;
-- Synergy benefit in the range of $40 million to $50 million
pretax;
-- Store development plans are projected to be approximately 20
to 22 standard size stores and 55 to 65 limited assortment
stores, including licensed stores. Major remodels are
estimated at approximately 110 to 120 stores and minor
remodels are estimated at approximately 25 to 35 stores;
-- Sales attrition, exclusive of new business, in the traditional
food distribution business will approximate four to five
percent for the year;
-- The second and third quarter of fiscal 2008 will consist of 12
weeks of operating results of the acquired operations compared
to 13 weeks for the second and third quarter of fiscal 2007;
-- Stock option expense is projected to be approximately $0.12
per diluted share compared to $0.08 in fiscal 2007
representing the full-year impact of the acquired operations
and the larger employee base of the company;
-- Total capital spending is projected to be approximately $1.2
billion, including capital leases; and
-- The effective tax rate is estimated to be 39 percent.
A conference call to review the second quarter results is
scheduled for today at 9:00 a.m. (CDT). A live Web cast of the call
will be available at http://investor.supervalu.com. An archive of the
call is accessible via telephone by dialing 630-652-3041 with passcode
19394806 and through the company's Web site at www.supervalu.com. The
conference call archive will be available through November 16, 2007.
About SUPERVALU INC
SUPERVALU INC. is one of the largest companies in the United
States grocery channel with estimated annual sales of approximately
$44 billion. SUPERVALU holds leading market share positions across the
U.S. with its approximately 2,450 retail grocery locations. Through
SUPERVALU's nationwide supply chain network, the company provides
distribution and related logistics support services to more than 5,000
grocery endpoints across the country. SUPERVALU currently has
approximately 190,000 employees. For more information about SUPERVALU
visit www.supervalu.com.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR
THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained
herein, the matters set forth in this news release, including
statements as to the progress and expected benefits of the combination
of the operations of Albertson's, Inc. that were acquired in June 2006
with those of SUPERVALU, such as efficiencies, cost savings,
synergies, market profile and financial strength, and the competitive
ability and position of the combined company, and other statements
identified by words such as "estimates," "expects," "projects,"
"plans," and similar expressions are forward-looking statements within
the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially, including the possibility that the anticipated
benefits from the acquisition cannot be fully realized or may take
longer to realize than expected, the possibility that costs or
difficulties related to the combination of Albertsons operations into
SUPERVALU will be greater than expected, and the impact of
competition, economic and industry conditions, security and food and
drug safety issues, severe weather and natural disasters, escalating
costs of providing employee benefits, and other labor relations issues
including contract negotiations, expansion, liquidity, legal and
administrative proceedings, regulatory and accounting matters, changes
in operating conditions, and other risk factors relating to our
business or industry as detailed from time to time in SUPERVALU's
reports filed with the SEC. You should not place undue reliance on
these forward-looking statements, which speak only as of the date of
this news release. Unless legally required, SUPERVALU undertakes no
obligation to update publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
SUPERVALU INC. and Subsidiaries
CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
(unaudited)
Fiscal Quarter Ended Fiscal Quarter Ended
(In millions, except per
share data) September 8, 2007 September 9, 2006
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Net sales
Retail food and drug $ 7,977 $ 8,522
79% 80%
Supply chain services 2,182 2,144
21% 20%
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Total net sales $ 10,159 $ 10,666
100.0% 100.0%
======================================================================
Operating earnings
Retail food and drug
operating earnings $ 385 $ 361
Supply chain services
operating earnings 63 56
General corporate expenses 42 26
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Total operating earnings 406 391
Interest expense, net 163 176
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Earnings before income
taxes $ 243 $ 215
Income tax expense 95 83
- ----------------------------------------------------------------------
Net earnings $ 148 $ 132
======================================================================
LIFO charge $ 11 $ 6
Depreciation and
amortization
Retail food and drug $ 206 $ 242
Supply chain services 22 22
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Total $ 228 $ 264
======================================================================
Note: SUPERVALU's second quarter of fiscal 2008 ended September 8,
2007 and includes 12 weeks of combined results compared to the second
quarter of fiscal 2007 which included 13 weeks of acquired operations.
SUPERVALU INC. and Subsidiaries
CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS
(unaudited)
Fiscal Year-to-Date Fiscal Year-to-Date
Ended Ended
(In millions, except per share
data) September 8, 2007 September 9, 2006
- ----------------------------------------------------------------------
Net sales
Retail food and drug $ 18,400 $ 11,452
79% 70%
Supply chain services 5,050 4,997
21% 30%
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Total net sales $ 23,450 $ 16,449
100.0% 100.0%
======================================================================
Operating earnings
Retail food and drug
operating earnings $ 834 $ 489
Supply chain services
operating earnings 130 132
General corporate expenses 92 62
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Total operating earnings 872 559
Interest expense, net 386 202
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Earnings before income taxes $ 486 $ 357
Income tax expense 190 138
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Net earnings $ 296 $ 219
======================================================================
LIFO charge $ 19 $ 9
Depreciation and amortization
Retail food and drug $ 501 $ 299
Supply chain services 51 52
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Total $ 552 $ 351
======================================================================
Note: SUPERVALU's fiscal 2008 year-to-date ended September 8, 2007
and includes 28 weeks of combined results compared to fiscal 2007
year-to-date which included 13 weeks of acquired operations.
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
Fiscal Quarter Fiscal Quarter
Ended Ended
(In millions,
except per share September 8, September 9,
data) 2007 % of sales 2006 % of sales
- ----------------------------------------------------------------------
Net sales $ 10,159 100.0% $ 10,666 100.0%
Cost of sales 7,826 77.0% 8,205 76.9%
- ----------------------------------------------------------------------
Gross profit 2,333 23.0% 2,461 23.1%
Selling, general
and
administrative
expenses 1,927 19.0% 2,070 19.4%
- ----------------------------------------------------------------------
Operating earnings 406 4.0% 391 3.7%
Interest
expense, net 163 1.6% 176 1.7%
- ----------------------------------------------------------------------
Earnings before
income taxes 243 2.4% 215 2.0%
Income tax expense 95 0.9% 83 0.8%
- ----------------------------------------------------------------------
Net earnings $ 148 1.5% $ 132 1.2%
======================================================================
Earnings per
common share
Basic
Net earnings $ 0.70 $ 0.63
Diluted
Net earnings $ 0.69 $ 0.61
Weighted average
number of common
shares
outstanding
Basic 212 211
Diluted 216 220
Note: SUPERVALU's second quarter of fiscal 2008 ended September 8,
2007 and includes 12 weeks of combined results compared to the second
quarter of fiscal 2007 which included 13 weeks of acquired operations.
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
Fiscal Fiscal
Year-to-Date Year-to-Date
Ended Ended
(In millions, except September 8, September 9,
per share data) 2007 % of sales 2006 % of sales
- ----------------------------------------------------------------------
Net sales $ 23,450 100.0% $ 16,449 100.0%
Cost of sales 18,034 76.9% 13,173 80.1%
- ----------------------------------------------------------------------
Gross profit 5,416 23.1% 3,276 19.9%
Selling, general and
administrative
expenses 4,544 19.4% 2,717 16.5%
- ----------------------------------------------------------------------
Operating earnings 872 3.7% 559 3.4%
Interest expense,
net 386 1.6% 202 1.2%
- ----------------------------------------------------------------------
Earnings before income
taxes 486 2.1% 357 2.2%
Income tax expense 190 0.8% 138 0.9%
- ----------------------------------------------------------------------
Net earnings $ 296 1.3% $ 219 1.3%
======================================================================
Earnings per common
share
Basic
Net earnings $ 1.40 $ 1.26
Diluted
Net earnings $ 1.37 $ 1.21
Weighted average
number of common
shares outstanding
Basic 211 174
Diluted 216 184
Note: SUPERVALU's fiscal 2008 year-to-date ended September 8, 2007
and includes 28 weeks of combined results compared to fiscal 2007
year-to-date which included 13 weeks of acquired operations.
SUPERVALU INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(unaudited)
September 8, February 24,
2007 2007
- ----------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 277 $ 285
Accounts and notes receivable, net 867 957
Inventories 2,823 2,749
Prepaid and other current assets 309 469
- ----------------------------------------------------------------------
Total Current Assets 4,276 4,460
Land, buildings, leasehold improvements and
equipment, net 7,388 8,415
Goodwill 6,913 5,921
Intangibles, net 1,980 2,450
Other assets 508 456
- ----------------------------------------------------------------------
Total Assets $ 21,065 $ 21,702
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 3,450 $ 3,548
Current maturities of long-term debt and
capital lease obligations 346 286
Other current liabilities 863 871
- ----------------------------------------------------------------------
Total Current Liabilities 4,659 4,705
Long-term debt and obligations under capital
leases 8,590 9,192
Other long-term liabilities and deferred
credits 2,126 2,499
Total Stockholder's Equity 5,690 5,306
- ----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 21,065 $ 21,702
======================================================================
CONTACT: SUPERVALU INC.
Investors and Financial Media:
Yolanda Scharton, 952-828-4540
yolanda.scharton@supervalu.com
or
Jean Giese, 952-828-4939
jean.giese@supervalu.com