Supervalu Posts $1.47B Q2 Loss, Lowers Outlook

Supervalu's stock dropped dramatically on Tuesday after the company announced a significant loss for the second quarter.

Eden Prairie-based Supervalu, Inc., on Tuesday reported a net loss of $1.47 billion, or $6.94 per share, for its second quarter-missing analyst expectations. The company reported $8.7 billion in net sales for the quarter.

The results were well below last year's second quarter, when the company reported net sales of $9.5 billion and earnings of $74 billion, or 35 cents per share.

The grocery store operator attributed the poor second-quarter results in part to approximately $1.52 billion in charges related to a labor dispute at Shaw's, one of the company's retail chains. The company said that the “impairment charge was triggered by a required reconciliation of Supervalu's stock price to book value per share.”

After adjusting for the one-time charges, the company said that it would have posted net earnings of $59 million, or 28 cents per share.

Analysts polled by Thomson Reuters were expecting earnings of 29 cents per share and revenue of $8.74 billion.

“Our sales performance continues to reflect a difficult operating environment,” Supervalu CEO and President Craig Herkert said in a statement. “As the company moves into the next phase of its business transformation, we remain focused on our customers and taking actions that will better meet their needs. I remain confident that we have the correct strategy in place to achieve long-term success.”

The company lowered its guidance and now projects a net loss in the range of $5.74 to $5.94 per share for fiscal 2011-or earnings of $1.40 to $1.60 excluding impairment charges and other costs.

“It will take longer than originally anticipated to realize the benefit of the marketing, merchandising, and operational initiatives that we continue to build upon,” Herkert said in a statement.

Shares of Supervalu's stock dropped about 15 percent to close at $10.55 on Tuesday. Shares were trading down about 1.5 percent to $10.39 during Wednesday morning trading.

Supervalu-which operates a network of about 4,280 stores-is Minnesota's fourth-largest public company based on its fiscal-year 2009 revenue, which totaled $44.6 billion. The company reported revenue of $40.6 billion in its most recently completed fiscal year.