Supervalu’s Q3 shows results of acquisitions on wholesale business
Grocery retailer and wholesaler Supervalu has shared the results from its fiscal 2018 third-quarter, which included a boon to its wholesale business in the form of its Unified Grocers acquisition, even as retail sales declined. The Minneapolis-based company’s total continuing operations saw net sales of $3.94 billion — up 31% from $3 billion in the same period last year.
Supervalu’s retail division netted $1.02 billion in sales, down 4.1% from last year’s $1.06 billion, which the company attributed to a 3.5% dip in same-store sales and store closings, offset by new and acquired store sales. The company’s retail operating loss was $6 million for the quarter, a number that included $3 million in costs related to store closures. Supervalu’s third-quarter operating loss was well below the loss it posted in the same period last year, when it reported $14 million.
The impact of retail losses on Supervalu’s bottom line was buoyed somewhat by its wholesale division’s performance. The wholesale business posted $2.89 billion in net sales, an increase of 52% over the prior period, which the company said was driven by the Unified Grocers acquisition, as well as new customer sales and increased sales to existing customers. Operating earnings were down slightly from last year, coming in at $48 million after being adjusted for $2 million of merger and integration costs. In the prior third quarter, Supervalu’s wholesale division brought in $52 million in operating earnings.
“With the influx of significant new business in certain distribution centers, we experienced a larger-than-anticipated increase in expenses, but we're encouraged by the work we are doing to address those costs and believe they are manageable going forward,” Supervalu president and CEO Mark Gross said. “We remain committed to investing in our wholesale business to drive future growth.”
On the corporate side, Supervalu saw fees earned of $33 billion from services agreements, and its new corporate operating loss was $1 million — which included $3 million of merger and integration cost. This is compared with net corporate operating earnings of $4 million last year.
With the Unified Grocers acquisition completed in Q3, the company set its sights on its Associated Grocers acquisition, closing it early in its fourth quarter.
“We're pleased to have completed our acquisition of AG Florida early in the fourth quarter,” Gross said. “The work done in the third quarter concluded with this deal which, combined with the acquisition of Unified Grocers earlier this fiscal year, demonstrates our commitment to the strategic growth of our Wholesale business. Furthermore, we're extremely pleased with the integration work at Unified and the progress made in that market.”