Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Supervalu Inc. (SVU): Is This Speculative Grocery Company A “Super Value”?

Page 1 of 2

Editor’s Note: This initial article stated that Supervalu owns the Shop ‘n Save chain; this is incorrect. Shop ‘n Save is locally owned and operated with Supervalu supplying the chain. This article has been corrected.

At one time, SUPERVALU INC. (NYSE:SVU) was one of the largest and most profitable grocery companies in the United States. However, as a result of stiff competition and bad economic conditions, the company’s sales have been declining for the past five years, and the company has been forced to divest a significant portion of its business in order to focus on returning to profitability and stabilizing its businesses. Will this once-great company succeed in returning to its former glory, or should investors get out while they still can?



SUPERVALU INC. (NYSE:SVU) makes its money from three different business segments. Regional Food Operations, which contributed 28% of last year’s revenue has been downsized significantly (more on that later) with the number of grocery stores reduced from almost 1,100 to about 200. The company’s regional grocery stores are operated under the Cub Foods, Farm Fresh, Hornbacher’s, and Shoppers Food & Pharmacy names.

The reason for the downsizing was to allow the company to concentrate on the other two segments of its business. The Save-A-Lot stores segment operates almost 400 stores and licenses another 950. Save-A-Lot is a discount supermarket that is a no-frills which reduces costs wherever possible in order to offer the lowest prices on its grocery items. The stores even save on labor and shelving by displaying products directly in their shipping cartons. The stores have a limited assortment of products; generally carry only private label (store brand) products, and only one size.

The bulk of Supervalu’s business comes from its Supply Chain Services segment, which supplies a network of about 1,900 independent grocery retailers in addition to their own stores. The segment has several long-standing business relationships, such as with IGA, who SUPERVALU INC. (NYSE:SVU) has supplied for over 80 years.

Efforts to Bring Back Growth

Supervalu has taken steps over the past several years to divest underperforming businesses and close underperforming stores in order to bring profitability back to the company. Most notably, in March of this year, Supervalu sold 874 of its grocery stores, which included the Albertson’s, Acme, and Star Market brand names, for $3.3 billion to AB Acquisition. However, the deal only brought $100 million in cash for the company, with the other $3.2 billion in the form of assuming SUPERVALU INC. (NYSE:SVU) debt.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!