Investors have been looking at the struggling grocery-store operator since July, when it disclosed plans to sell all or part of the company.
But Supervalu said its network of 4,400 supermarkets, including brands such as Albertsons, Jewel-Osco and discount chain Save-A-Lot, have seen sales and customer traffic continue to fall due to "the stressed consumer, the competitive environment and continued investment in achieving competitive pricing."
Supervalu's stock rose 4.9%, or 10 cents to close at $2.14 Thursday, after jumping over 9% earlier in the session.
Supervalu isn't alone in its struggles. Last week, competitor Safeway Inc. SWY -1.03% said its sales volumes declined once again and its established locations didn't sell as much as the grocer expected a few months ago.
Conventional supermarkets are all grappling with intense competition from dollar stores, drugstores and mass-market retailers such as Wal-Mart Stores Inc. WMT -1.23% who are expanding their grocery departments, while specialty and organic shops such as Whole Foods Market Inc. WFM -3.35% gain traction with consumers.
Chairman and Chief Executive Wayne C. Sales, who took over when the company ousted then-Chief Craig Herkert at the end of July, said Supervalu has accelerated its turnaround efforts since he stepped in to the executive role—refinancing its credit facility, restructuring the leadership team and announcing plans to close about 60 underperforming or nonstrategic stores.
But Supervalu's sales at established stores were down 4.3% in the latest quarter, worse than the 3.7% drop in its fiscal first quarter. Its gross margin fell to 21.4% from 22.2% the prior year, amid increased promotional activity.
Supervalu also cut back its debt-reduction forecast for the year by $50 million to a range of $400 million to $450 million.
Some analysts say it will be difficult for Supervalu to find a buyer given its debt load, declining market share, and the challenges the industry faces—going as far as to suggest the company won't survive at the rate it is going.
When asked to respond to such criticisms, Mr. Sales said on a conference call Thursday, "I think we often forget about our strengths.
We are still a $37 billion organization, we have a diverse portfolio of businesses from the independent stores to the hard-discount business…We are still in the top five for all of our suppliers. In my meetings with our suppliers, it's very clear how important we are to them and how much they want us to win."
Supervalu said it is also making progress in repositioning its prices to offer more value to consumers and is cutting costs in ways it says won't impact customers' experiences.
However, analysts and grocery industry executives argue this kind of massive turnaround takes years, not quarters, to achieve. "As such, the timing of repositioning half our stores will extend past the end of fiscal 2013," the company conceded.
Even Supervalu's once-golden chain, Save-A-Lot is taking a hit, which Mr. Sales attributed to management getting "off of strategy" by stocking too many national-branded items, rather than lower-cost private-label products, and not managing costs well.
He said Save-A-Lot is back on track now, and the few stores that have implemented their new strategy are seeing positive sales...
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Source: Argentine Beef Packers S.A.
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