SuperValu (SVU) Stock Up Sharply Despite Loss

Shares of supermarket operator SuperValu Inc. (SVU: Charts, News), rose sharply on Tuesday after the company reported significantly lower fourth quarter earnings. SuperValu stock rose +0.81 or +15.2 percent Tuesday, on heavy volume of 38,452,182 shares in active trading on the NYSE.

The loss was due in large part to SuperValu taking a large goodwill and intangible asset impairment after tax adjustment to its net income of $492 million. The company also made an adjustment for workforce reduction costs of $13 million. SuperValu reported a net loss for its fiscal fourth quarter ended on February 25th of -$424 million, or $2.00 per diluted share. This compares to net income of $95 million, or $0.44 per share in the same period one year ago. Without the goodwill charge and other adjustments, SuperValu had a fiscal Q4 profit of $81 million, or $0.38 per share. The analyst consensus for Q4 earnings was $0.35 per share. Daily Chart
Eden Prairie, MN based SuperValu Inc. is the nation's third largest grocery retailer and distributor after Safeway and Kroger's. The company, which operates over 4,300 stores nationwide, has struggled recently with the economic slump. SuperValu operates well known supermarkets chains such as Albertson's and Jewel, Shaw's and discount chain, Save-A-Lot. While the company reported better than expected net income after charges, net sales for its fiscal fourth quarter fell to $8.23 billion, a decline of 5 percent from last year's fourth quarter sales of $8.66 billion. According to SuperValu, the drop in sales was due to the sale of fueling stations and food store closures. Margins also fell, with gross profit margin for Q4 falling to $1.9 billion or 22.8 percent of net sales, compared to the previous year's Q4 results of $2.0 billion or 23.3 percent of net sales. Tuesday's sharp rise in SuperValu stock was mostly attributed to its guidance for its fiscal 2013 yearly earnings. The company expects per share earnings results in a range of $1.27 to $1.42. According to a survey of 14 market analysts conducted by Zacks Investment Research, the consensus was for earnings of $1.19 for fiscal 2013. The company's stock has been under pressure since May of 2011, when it was trading over $11 per share, causing speculation the company was headed towards bankruptcy. This created a large short position - short ratio of 13.4 - in the stock which recently sank to its 52 week low of $5.07 per share. In a post earnings interview, CEO and President, Craig Herkert stated that, "We are committed to fair price plus promotions and will intensify our efforts as we enter the second year of our business transformation. As we move into fiscal 2013, we see another year of improving identical store sales and will continue to take appropriate steps to deliver greater value to our customers and move closer to becoming America's Neighborhood Grocer." As signs of an improving economy continue to materialize, supermarket chains will most likely be major beneficiaries. With a depressed stock price and a large short position, SuperValu may have seen an intermediate bottom in its stock price. Other News About SVU SUPERVALU's CEO Discusses Q4 2012 Results Transcript of earnings conference call on April 10th of 2012. Supervalu May Live Up to Its Name Article in Barron's recommending the stock. Other Stocks in the News Best Buy CEO Quits in Probe CEO Brian Dunn resigns amid probe into "personal conduct". Alcoa Surges Past Estimates Alcoa reports better than expected results for its fiscal first quarter of 2012. Copyright 2012 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Apr 11, 2012
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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