Supervalu and Safeway beef up organics

MINNEAPOLIS Supervalu and Safeway both reported profitable quarters and announced plans to ramp up store remodels in 2008. Supervalu also rolled out its first private-label line of organic products, while Safeway is planning to expand its O Organics line to other retailers.

Supervalu debuted Wild Harvest organics in April with an initial rollout of 150 items, including milk, eggs and produce. The chain expects to eventually expand the line to 300 products. Supervalu chief executive officer Jeff Noddle said Wild Harvest is part of a plan to increase its private-label profile. “We plan to increase our private-label mix from 15 percent to 17 percent by 2010,” Noddle said.

For its fourth quarter, Supervalu reported a 1 percent jump in total sales of $10.39 billion and $156 million in earnings, a 30 percent increase from last year. Total sales for fiscal 2008 were $44 billion, which were on track with previous forecasts.

Supervalu did not break out pharmacy numbers for the year, but it’s estimated that its 922 pharmacies generated more than $3.2 billion in sales. Noddle did touch on Supervalu’s new ARx system, which was implemented chainwide in February and unified all of Supervalu’s pharmacies.

“Our ARx system replaced four separate platforms and now allows our pharmacies to deliver things like the electronic transmission of prescriptions,” Noddle said. The new system also makes it easier for customers to reorder prescriptions and check their refill status using the ARx 24-hour telephone refill system.

Supervalu also has 165 remodels planned for the year, including 37 for Albertsons stores in California, 25 for Jewel-Osco in the Chicago area and 21 for Shaw’s Supermarkets in New England. Some remodels will feature a new format with pharmacies at the front of the store.

Safeway last month also reported a profitable quarter and unveiled ambitious plans to expand its organics line to other retailers, as well as open a new small-format prototype store by the end of June.

Safeway chief executive officer Steve Burd said the chain plans to have other retailers carry its O Organics line by the end of the year, though he didn’t identify any retailers by name. Safeway launched O Organics in 2006 and expects the line to generate $400 million in sales this year after producing $310 million in 2006. The line includes packaged foods, produce and cereal.

Burd also confirmed plans announced earlier this year to open a smaller format supermarket during the first half of this year. No details have been released, but Safeway expects the first store to open by the end of June. The move is considered a reaction to Tesco’s opening of 62 small Fresh & Easy stores on Safeway’s turf in California and the Southwest.

For its first quarter, Safeway reported net income of $193 million compared with $174 million during the same period last year. Total sales for the quarter were $10 billion compared with $9.3 billion last year. Same-store sales for the quarter increased 2.9 percent.

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