Supervalu CEO Craig Herkert Ousted, Replaced by Chairman
Struggling Supervalu, Inc., has dismissed Craig Herkert—its chief executive for the past three years—and replaced him with Chairman Wayne Sales.
Company spokesman Jeff Swanson told Twin Cities Business on Monday that Supervalu’s board made the decision to terminate Herkert’s employment and that his abrupt exit was not of his own choosing.
“After careful deliberation, the board decided that this change would be important to the company’s efforts to improve our sales and earnings trajectory and generate long-term shareholder value,” Swanson said.
Sales will serve as president and CEO, effective immediately, in addition to retaining his duties as chairman. Sales has been a Supervalu director since 2006 and has served as chairman of the board since 2010.
The board’s move to oust Herkert comes less than a week after it approved issuing non-qualified stock options and retention agreements to several Supervalu executives in order to encourage them to stay put. Herkert was awarded 346,875 shares with an exercise price of $2.28 per share, and the shares were set to vest in three equal installments over the next three years; however, he was not offered a retention agreement.
Supervalu announced earlier this month that it has begun reviewing “strategic alternatives” and is considering a sale. That announcement was made in conjunction with the company’s dismal first-quarter earnings results, which prompted it to suspend its quarterly dividend.
The Eden Prairie-based grocer earned $41 million, or 19 cents per share, for the quarter that ended June 16—a year-over-year drop of about 45 percent and significantly shy of the 38 cents per share that analysts were expecting. Revenue, meanwhile, totaled $10.6 billion, down 4.7 percent from the same period a year ago and less than the $10.8 billion that analysts expected.
“As we execute our business plan, the board will continue its review of strategic alternatives, and I am still leading that process,” Sales said Monday in a prepared statement.
Sales has held executive positions at retail companies for more than 35 years and most recently served as vice chairman of Canadian Tire Corporation. Prior to joining Canadian Tire in 1991, he served in several senior leadership positions with Kmart Corporation.
Sales said that in his new capacity, he will focus on “identifying factors that will drive meaningful improvements in our strategy execution and overall performance.” He added that the company will “take significant cost out of the business, and move with urgency in our retail food business to lower prices and create points of sustainable differentiation for our customers.”
Sales also vowed to work with Save-A-Lot licensees to try to grow the discount grocery chain, which has performed better than some of the company’s other chains, which include Cub Foods, Albertsons, Jewel-Osco, and Shaw’s.
The Supervalu board elected Philip Francis as its lead director, a position that the board is required to fill in cases when the chairman is not an independent director.
Supervalu is among Minnesota’s five largest public companies based on revenue. It has approximately 4,400 stores and employs roughly 130,000. The company reported a net loss of $1 billion on net sales of $36.1 billion in its most recently completed fiscal year.
Shares of the company's stock were trading up 9.5 percent at $2.18 per share mid-day on Monday.