Supervalu earnings swing to net loss
MINNEAPOLIS — Supervalu reported a net loss of $11 million during its 2017 fiscal third quarter, ended Dec. 3. However, when backing out after-tax non-cash charges comprising a settlement charge, goodwill impairment charge and store closure charges and costs partially offset by a deferred income tax benefit, Supervalu would have earned a profit from continuing operations of $14 million.
Net earnings from continuing operations in in 2016’s fiscal Q3 came in at $16 million, which included $6 million in after-tax costs related to asset impairment charges, employee severance and store closure charges and costs.
Supervalu completed the sale of its Sav-A-Lot business on Dec. 6 — after its Q3 ended — and presented Sav-A-Lot results as discontinued operations.
“The successful sale of Save-A-Lot early in the fourth quarter provides Supervalu with additional flexibility to operate and grow our business,” said President and CEO Mark Gross. “Additionally, our wholesale team has done a tremendous job delivering for our customers. It is a significant accomplishment that we increased wholesale sales compared to last year given the sales lost at the end of fiscal 2016. Unfortunately, in our retail segment we have not been able to overcome persistent deflation, competitive impacts, and other factors. It takes time to change customers’ shopping habits, but our team is dedicated to improving our results."
Added Chief Operating Officer and CFO Bruce Besanko: “Early in the fourth quarter we used the majority of the proceeds from the sale of Save-A-Lot to reduce our outstanding debt by approximately $1.1 billion. We have also taken steps to reduce our pension plan obligations through a successful lump-sum buyout of certain plan participants that resulted in the pension settlement charge this quarter. In addition, we made a $25 million cash contribution to the pension plan. Given the many moving parts from the sale of Save-A-Lot, we are managing the business for the next several quarters by reference to pro forma adjusted EBITDA. For the third quarter, pro forma adjusted EBITDA was $114 million, $18 million less than last year’s third quarter, reflecting the challenging operating environment across the grocery industry.”
Third quarter net sales for Supervalu’s most recent quarter came in at $3 billion, a 1.4% year-over year decrease. Gross profit for the third quarter was $407 million, or 13.6 percent of net sales, compared to $436 million and 14.3 percent of net sales, respectively.
At Supervalu’s retail division, 2017 Q3 sales came in at $1.06 billion, a decrease of 3.4%. Same-store sales of negative 5.7% were attributed for the decline.
Retail operating loss in 2017 Q3 was $14 million, or negative 1.3% of net sales and included a $15 million goodwill charge and $1 million of store closure charges and costs. When adjusting for these items, retail operating earnings were $2 million, or 0.2% of net sales. Retail operating earnings in Supervalu’s 2016 Q3 were $21 million, or 2% of net sales, which included $1 million of store closure charges and costs. When factoring this charge in, retail operating earnings in 2016’s Q3 were $22 million.
Supervalu attributed lower sales and higher employee costs partially offset by acquired and new stores for the decrease in retail operating earnings.
FedEx dropoff and pickup services going live within Walgreens locations
MEMPHIS, Tenn. — FedEx Corp. and Walgreens on Wednesday announced a long-term alliance agreement that will offer convenient access to FedEx dropoff and pickup services at thousands of Walgreens locations across the United States beginning within the next several months.
“Walgreens, with its strong focus on customer care, is the perfect retailer to help us continue to meet the growing demand for convenient, secure dropoff and pickup options, and our research has shown that customers rank pharmacies as a preferred location for accessing their e-commerce shipments,” stated Raj Subramaniam, EVP chief marketing and communications officer, FedEx Corporation.
“Working with FedEx to provide safe and secure delivery locations while making it easy for customers to ship returns and other packages through the FedEx networks is another way we are becoming America’s most loved pharmacy-led health, wellbeing and beauty retailer,” added Reuben Slone, Walgreens SVP supply chain.
By bringing together Walgreens convenient network of retail locations across the country and FedEx as one of the leading enablers of the rapidly growing e-commerce economy, this new alliance will significantly expand the options available to consumers to drop off and pick up their FedEx shipments and handle multiple tasks during a single store visit. As part of the FedEx Onsite program, customers will be able to drop off pre-packaged and pre-labeled shipments at Walgreens stores and pick up packages that they direct to their neighborhood Walgreens.
After an initial, small-scale rollout this spring, Walgreens and FedEx expect to have the program available at thousands of Walgreens locations later this calendar year and chainwide at nearly 8,000 Walgreens stores by the fall of 2018.
Ahold to enhance supplier diversity
CARLISLE, Pa. — Ahold USA inked a deal with RangeMe, an online platform that streamlines new product discovery between retailers and product suppliers. Specifically, the technology platform allows Ahold to discover and source more women-owned and minority-owned businesses with innovative and quality products for its division stores.
Ahold USA stated it will use RangeMe to not only scale its product and supplier discovery efforts, but also to manage the company’s inbound product submissions.
"Our goal is to develop more mutually beneficial and successful partnerships with small and diverse suppliers," said Nick Bertram, SVP of merchandising strategy and support, Ahold USA. "This partnership with RangeMe reinforces our commitment to accomplish this at scale while providing our division customers with amazing products at competitive costs."
"We are honored to partner with Ahold USA to scale such an important initiative in our industry," said Nicky Jackson, founder and CEO of RangeMe. "It's refreshing to work with such a forward-thinking retailer to bring greater opportunity to our growing and diverse supplier base."
Ahold USA is the parent company of many grocery brands, including Stop & Shop New England, Stop & Shop New York Metro, Giant Landover, Giant Carlisle and online grocery Peapod.
San Francisco-based RangeMe also announced it struck a deal whereby beauty retailer Sephora will also utilize its services.