Trimmed Supervalu Gets New Team - Analyst Blog
07 March 2013 - 4:20AM
Zacks
Leading grocery chain Supervalu Inc. (SVU) has
reshuffled its leadership roles following the sale of a number of
its supermarkets to Cerberus Capital.
Under the leadership of former OfficeMax Inc.
(OMX) Chief Executive Officer Sam Duncan, who became Supervalu's
CEO in Feb 2013 the company made many changes to its management
team.
After the sellout closes by Mar 18, 2013, Tim Lowe, the present
executive vice president of merchandising and Michael Moore, the
present chief marketing officer, will be replaced by Mark Van
Buskirk, from Supervalu’s rival grocery chain The Kroger
Company (KR). He will take up the responsibility of
executive vice president of merchandising and marketing in the
company.
As a part of broad-based strategic alternatives, Supervalu will
sell Albertson's, Jewel-Osco, Acme, Shaw's and Star Market chains,
all of which combined come to about 877 stores. These go to private
equity firm Cerberus Capital Management LP, for $3.3 billion.
Management commented that it wants to slim down in order to focus
more on Save-A-Lot discount stores, as well as its smaller regional
chains Cub, Farm Fresh, Shoppers, Shop 'n Save and
Hornbacher's.
The company has also changed the management team of St. Louis-based
supermarkets Shop ‘N Save and Save-A-Lot. Ritchie Casteel replaces
Santiago Roces as president and CEO of Save-A-Lot. Eric Hymas
replaces Marlene Gebhard as president of Shop ‘N Save.
We believe that the executive management turnaround could prove
beneficial to Supervalu’s fundamentals as all the new appointees
have extensive retail and grocery experience. Also, the idea of
increasing focus on the Save-A-Lot discount stores is encouraging
as it happens to be the highest revenue earner for Supervalu and
has the potential to remain the key growth driver.
The financial performance of Save-A-Lot was disappointing in the
past few quarters and we expect a full-proof turnaround strategy
from the new leaders to make the Save-A-Lot program profitable.
Supervalu missed estimates in the third quarter of fiscal 2013 and
also posted lower earnings from the year-ago quarter. Moreover, the
company reported negative identical store sales successively for
the past four years. The trend has continued in the first half of
fiscal 2013.
Now, in order to combat four successive years of negative identical
store sales and re-position the company for growth, Supervalu is
geared for expansion of its private brand portfolio and to step up
cost-reduction initiatives.
These are expected to reduce administrative and operational
expense by an additional $250 million by fiscal 2014. The
anticipated shutdown of meat plants like Sanderson Farms
Inc. (SAFM) due to the scheduled sequester by the U.S.
government may disrupt supply to the company, which may in turn
affect sales.
Currently, Supervalu carries a Zacks Rank #3 (Hold).
KROGER CO (KR): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis Report
SANDERSON FARMS (SAFM): Free Stock Analysis Report
SUPERVALU INC (SVU): Free Stock Analysis Report
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