Exhibit 99.1
SUPERVALU REPORTS FIRST QUARTER RESULTS AND REAFFIRMS DILUTED EARNINGS PER
SHARE GUIDANCE FOR FISCAL 2006 OF $2.30 TO $2.45
MINNEAPOLIS, July 20 /PRNewswire-FirstCall/ -- SUPERVALU INC. (NYSE: SVU)
today reported results for the first quarter of fiscal 2006, which ended June
18, 2005. The company reported net sales of $6.0 billion compared to $5.9
billion last year, net earnings of $91.2 million compared to $149.4 million,
basic earnings per share of $0.67 compared to $1.10, and diluted earnings per
share of $0.64 compared to $1.04. First quarter earnings per share exceeds Wall
Street consensus of $0.61. Last year's first quarter results included a net
after-tax gain on the sale of the company's minority interest in WinCo Foods,
Inc. (Winco) of $68.3 million, or $0.47 diluted earnings per share.
Jeff Noddle, SUPERVALU chairman and chief executive officer said, "Overall,
we are pleased with our results during the first quarter, which reflect the
diversified business mix of our company. Last year, we reported a gain in the
first quarter on the sale of Winco. When you exclude the gain from last year's
results, we achieved a record first quarter net earnings and diluted earnings
per share. We are also affirming our full-year diluted earnings per share
guidance for fiscal 2006 of $2.30 to $2.45. Our efforts this year are directed
at programs to drive sales performance. We recognize the importance of top line
growth in addition to our return on invested capital goal to leverage the
excellent progress we made last year."
Segment Results
Retail Food Segment -- First quarter retail net sales were $3.2 billion, an
increase of 1.7 percent compared to last year's first quarter. Sales performance
reflects new regional banner store openings partially offset by the impact of
store closings, primarily at Save-A-Lot, as well as a more competitive retail
environment. Comparable store sales growth for the quarter was negative 0.4z
percent, including slightly negative comparable stores sales at company-operated
Save-A-Lot's, when compared to last year's total retail comparable store sales
growth of positive 1.8 percent. When adjusted for planned in-market store
expansion, first quarter comparable store sales were flat. Save-A-Lot licensed
stores also experienced sales softness. Total retail square footage, including
licensed stores, increased by approximately 4.2 percent from last year's first
quarter, with Save-A-Lot's total square footage increasing by approximately 5.0
percent.
Reported retail operating earnings for the first quarter were $127.5 million
compared to $128.8 million in last year's first quarter, a decrease of 1.0
percent, or flat when adjusted for last year's earnings from Winco. Reported
operating earnings as a percent of sales were 4.0 percent compared to 4.1
percent in last year's first quarter. Operating earnings primarily reflect the
soft sales performance.
New store activity since last year's first quarter, including licensed
stores, resulted in 91 new store openings, opened and acquired, and 34 store
closings for 57 net new store openings. During the last 12 months, new store
openings include 81 extreme value stores, and 10 regional banner stores. Store
closings for the last 12 months include 33 extreme value stores and one regional
banner store. As of June 18, 2005, Save-A-Lot, including licensed stores,
operated 1,287 stores, of which 483 stores were combination stores compared to
314 combination stores at the end of last year's first quarter.
Supply Chain Services Segment -- First quarter net sales for supply chain
services (formerly the food distribution segment) were $2.8 billion, a slight
increase from last year's first quarter. Sales growth reflects new business,
primarily the recently acquired third-party logistics service business and new
business growth that offset customer attrition.
Reported supply chain services operating earnings for the first quarter were
$71.4 million compared to $62.9 million in last year's first quarter, an
increase of 13.4 percent. Reported operating earnings as a percent of sales were
2.6 percent compared to 2.3 percent in last year's first quarter, primarily
reflecting the higher-margin third-party logistics service business.
Outlook
SUPERVALU's fiscal 2006 outlook includes business assumptions, such as:
-- 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 increase by approximately one percent for
the year;
-- Overall square footage growth for SUPERVALU's retail store network,
including licensee stores, is expected to be approximately five percent
for the year. Store development plans, including licensee stores, are
approximately 65 to 85 extreme values stores and approximately 10 to 12
new regional banner stores. Remodeling activities, including licensee
stores, are approximately 75 extreme value combination store conversions
and approximately 40 regional banner major and minor store remodels;
-- Annual sales attrition in the traditional food distribution business
will be in the historical range of two to four percent when excluding
the cycling of three large customer transitions to other suppliers in
fiscal 2005;
-- Total capital spending is projected to be approximately $500 to $550
million, including approximately $90 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.
SUPERVALU affirms the full-year fiscal 2006 basic earnings per share range
of $2.43 to $2.58 and the diluted earnings per share range of $2.30 to $2.45.
Both basic and diluted earnings per share ranges include costs of approximately
$0.05 to $0.07 for new growth and return initiatives including supply chain
technology investments and the W. Newell & Co. produce business launch. On a
comparable basis, Fiscal 2005 basic earnings per share was $2.35 and diluted
earnings per share was $2.24 when eliminating the gain on the sale of WinCo.
Noddle added, "We remain committed to our strategy, which includes
innovative retail merchandising programs and network expansion and the delivery
of best-in-class supply chain services across the grocery retail channel and
beyond. The establishment of our new 18 percent return on invested capital goal
guides all of our important initiatives across the company."
Other Items
General corporate expense for the first quarter was $17.1 million compared
to $20.3 million last year. Net interest expense during the first quarter was
$36.9 million compared to $42.3 million last year. Last year's net interest
expense included $5.7 million of costs related to the early redemption of $250
million of notes.
Cash on hand at the end of the first quarter was $545 million, up from $464
million at fiscal year end, reflecting strong cash flow from operations. The
effective tax rate for first quarter was 37 percent.
Capital spending during the quarter was $102.3 million, including $23.9
million in capitalized leases, primarily funding retail store expansion and
store remodeling.
Total debt to capital was 39.2 percent at the end of first 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 145.6
million shares reflecting the 7.8 million shares under the company's outstanding
contingently convertible debentures. As of June 18, 2005, SUPERVALU had 135.7
million shares outstanding.
A conference call to review the first quarter results is scheduled for today
at 9:00 a.m. (CDT). A live Web cast of the call will be available at
http://www.supervalu.com . An archive of the call is accessible via telephone by
dialing (630) 652-3041 with passcode 12115763 and through the company's Web site
at http://www.supervalu.com . The conference call archive will be available
through August 3, 2005.
As of June 18, 2005 SUPERVALU's retail store network consists of 1,555
stores in 40 states, including 1,287 Save-A-Lot extreme value stores - 411
corporate-owned Save-A-Lot stores, 876 licensed Save-A-Lot stores; 268 regional
banner stores including 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 268 stores, while serving as secondary supplier to
approximately 400 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 1,555 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 more than 57,000 employees. For more information about
SUPERVALU visit http://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 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 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)
First Quarter First Quarter
(16 weeks) ended (16 weeks) ended
(unaudited) June 18, 2005 June 19, 2004
- --------------------------------- ---------------- ----------------
Net sales
Retail Food $ 3,184,528 $ 3,130,196
% of total 53.3% 53.0%
Supply Chain Services 2,787,762 2,780,453
% of total 46.7% 47.0%
Total net sales $ 5,972,290 $ 5,910,649
100.0% 100.0%
Earnings
Retail Food operating earnings $ 127,540 $ 128,797
% of sales 4.0% 4.1%
Supply Chain Services operating
earnings 71,356 62,899
% of sales 2.6% 2.3%
Subtotal 198,896 191,696
% of sales 3.3% 3.2%
General corporate expense (17,053) (20,335)
Gain on sale of WinCo Foods, Inc. - 109,238
Restructure and other charges (186) (279)
Total operating earnings 181,657 280,320
% of sales 3.0% 4.7%
Interest expense, net (36,892) (42,292)
Earnings before income taxes 144,765 238,028
Income tax expense (53,563) (88,617)
Net earnings $ 91,202 $ 149,411
NOTE 1:
Pretax LIFO expense $ 1,659 $ 1,800
NOTE 2:
Pretax depreciation and
amortization
Retail Food Segment $ 64,088 $ 61,515
Supply Chain Services Segment 29,967 31,104
General Corporate 109 376
Total Company $ 94,164 $ 92,995
CONSOLIDATED STATEMENTS OF EARNINGS
SUPERVALU INC. and Subsidiaries
(In thousands, except per share data)
First Quarter First Quarter
(16 weeks) ended (16 weeks) ended
--------------------------- ----------------------------
June 18, % of June 19, % of
(unaudited) 2005 sales 2004 sales
- ------------------------------- ------------ ------------ ------------ ------------
Net sales $ 5,972,290 100.0% $ 5,910,649 100.0%
Costs and expenses:
Cost of sales 5,102,739 85.5% 5,065,612 85.7%
Selling and administrative
expenses 687,708 11.5% 673,676 11.4%
Gain on sale WinCo Foods Inc. - 0.0% (109,238) 1.8%
Restructure and other charges 186 0.0% 279 0.0%
Interest Expense, net 36,892 0.6% 42,292 0.7%
Total costs and expenses 5,827,525 97.6% 5,672,621 96.0%
Earnings before income taxes 144,765 2.4% 238,028 4.0%
Income tax expense 53,563 0.9% 88,617 1.5%
Net earnings $ 91,202 1.5% $ 149,411 2.5%
Net earnings per common share -
basic $ 0.67 $ 1.10
Net earnings per common share -
diluted $ 0.64 $ 1.04
Weighted average number of
common shares outstanding
Basic 135,774 135,244
Diluted 145,603 145,378
Dividends declared per common
share $ 0.1525 $ 0.1450
CONDENSED CONSOLIDATED BALANCE SHEETS
SUPERVALU INC. and Subsidiaries
(In thousands)
First Quarter Fiscal
(unaudited) Year End
June 18, February 26,
2005 2005
---------------- ----------------
Assets
Current Assets
Cash and cash equivalents $ 544,893 $ 463,915
Receivables, net 453,725 464,249
Inventories, net 1,027,053 1,032,034
Other current assets 155,837 161,922
Total current assets 2,181,508 2,122,120
Property, plant and equipment, net 2,188,669 2,190,888
Goodwill & Other Long Term Assets 1,961,262 1,960,954
Total assets $ 6,331,439 $ 6,273,962
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,158,976 $ 1,106,860
Current debt and obligations
under capital leases 140,708 99,463
Other current liabilities 388,201 420,888
Total current liabilities 1,687,885 1,627,211
Long-term debt and obligations under
capital leases 1,524,915 1,578,867
Other liabilities and deferred income
taxes 540,201 557,323
Total stockholders' equity 2,578,438 2,510,561
Total liabilities and stockholders'
equity $ 6,331,439 $ 6,273,962
SOURCE SUPERVALU INC.
-0- 07/20/2005
/CONTACT: Investors, Yolanda Scharton, +1-952-828-4540,
yolanda.scharton@supervalu.com, or Media, Haley Meyer, +1-952-828-4786,
haley.m.meyer@supervalu.com, both of SUPERVALU INC./
/Web site: http://www.supervalu.com /