Supervalu sells Jewel-Osco grocery chain


Share
Originally Posted Online: Jan. 10, 2013, 3:25 pm
Last Updated: Jan. 11, 2013, 12:04 am
Comment on this story | Print this story | Email this story

NEW YORK (AP) — Supervalu Inc. is selling off five of its grocery chains, including Jewel-Osco and Albertson's, after years of being squeezed by intensifying competition.

The nation's No. 3 traditional supermarket operator said Thursday that the sale of 877 stores to an investor group led by Cerberus Capital Management also will include Acme, Shaw's and Star Market. The group already owns about 200 Albertson's in the South and Southwest.

Following the sale, Supervalu will focus on its Save-A-Lot discount stores, as well as its smaller regional chains - Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's. It will also keep its wholesale business that distributes groceries to stores.

The investor group will pay $100 million in cash for the stores, and the new company will assume $3.2 billion in existing debt. Cerberus will also offer to buy up to 30 percent of the remaining Supervalu for $4 per share after the deal closes.

Supervalu has struggled for years to turn around its business. The broader supermarket industry has been facing growing competition from big-box retailers such as Target, drugstore chains and dollar stores.

While bigger chains such as Kroger Co. have adapted by tweaking store formats and improving discount programs and product offerings, Supervalu has scrambled to keep pace.

This summer, Supervalu fired its CEO and tapped Chairman Wayne Sales to lead a turnaround. The company said at the time that it was reviewing its options, such as putting itself up for sale. In the meantime, it has closed stores and cut jobs as part of an effort to reduce costs.

Those efforts to fix its business will continue after the sale of its grocery chains is complete, the company said. Sam Duncan, who most recently was CEO of OfficeMax, will replace Sales as head of Supervalu after the deal closes.

On Thursday, Supervalu also reported a profit of $16 million, or 8 cents per share, for the third quarter. The results were boosted by a gain related to a settlement with credit card companies. A year ago, the company lost $750 million, or $3.54 per share.

However, total revenue for the period declined 5 percent to $7.9 billion. Sales at locations open at least a year fell 4.5 percent, and 4.1 percent at Save-A-Lot. Its profit margins also fell, in part because the company said it boosted promotions and cut prices for shoppers.

Bob Miller, who heads the Albertson's already owned by the Cerberus-led investment group, said the performance at the newly acquired Albertson's could be improved.

"In 2006, we acquired a set of stores that lacked investment and were in tough shape," he said, noting that those stores have grown into a "solid regional supermarket chain with growing sales."

A representative for the buyers noted that the transaction is still subject to approvals and declined to say whether any job cuts were planned for the newly acquired Albertson's, or whether the other chains would keep their names.

Supervalu's shares rose 15 percent to $3.51 in morning trading.

















 



Local events heading








  Today is Wednesday, July 30, the 211th day of 2014. There are 154 days left in the year.
1864 -- 150 years ago: After Sept. 1, every small box of matches will be required to have a 3 cent duty Lincoln stamp on it, and every large box will be one cent for every 100 matches.
1889 -- 125 years ago: Rock Island residents had contributed a total of $1,293 to the American Red Cross for the Johnstown flood relief fund.
1914 -- 100 years ago: Capt. Clark Means, new darkhorse twirler for the ARGUS staff, was in great form in his initial contest as a mound laborer. The result was that THE ARGUS trimmed the Union 6-5.
1939 -- 75 years ago: Hunter and Humprey Moody, young Decatur, Ill, brothers, lack only a few hours of establishing a new world light plane endurance record.
1964 -- 50 years ago: Gates of the 110th annual Mercer County Fair swing open tonight at Aledo for a full week of day and night activity. More that $36,000 will be paid in premiums and race purses.
1989 -- 25 years ago: The baseball field carved out of the cornfield near Dyersville, Iowa, continues to keep dreams alive for hundreds of visitors. Tourists from 26 state and France have visited Dan Lansing's farm to see the baseball diamond seen in the hit movie "Field of Dreams."






(More History)