The end for SUPERVALU SVU?
Supervalu is sinking faster with no correction in sight. The management doesn’t have a clue on how to fix things.
Save A Lot being the future has failed. Not only are they not going to make their goal to double the the number of Save A Lot stores in 5 years, 18 months after stating this goal the amount of NET new Save A Lots have been minimal. The last quarter Supervalu’s same store sales for Save A Lots was negative. How does this happen when Aldi and other discount retailers have been flourishing?
Retail is sinking like a rock. Even Cub in Minneapolis, their home town is getting killed by Target, Wal-Mart, Whole Foods and others. Then they send the head of Cub to Chicago to run Jewel Osco. Are they deliberately trying to kill all of Supervalu retail?
No one wants their wholesale. No one can buy wholesale without agreeing to a sweet heart deal to supply Supervalu’s retail. Supervalu’s retail cannot build their own supply chain, too expensive.
Too much debt, near 7 billion in debt. With so much debt, there is not much they can do to turn their stores around. Bad management. The only thing they know how to do is cut cut cut, which only leads to a cycle of ever decreasing sales.
Cub cuts 200 part-time workers in Twin Cities
The chain says "adjustments" aim to improve efficiency; parent Supervalu has been struggling.
By MIKE HUGHLETT, Star Tribune February 8, 2011 - 9:04 PM
“Cub Foods recently laid off about 200 part-time workers in the Twin Cities, or about 3.5 percent of its workforce, in the latest possible sign of weakness for its struggling parent company, Eden Prairie-based Supervalu Inc… Supervalu has suffered more than most. Its fourth-quarter earnings came in well below Wall Street forecasts while same-store sales dropped for the 11th consecutive quarter. The company said last month that an additional 350 corporate jobs will be eliminated by the end of May. The company had already shed 300 corporate jobs earlier in its fiscal year, making for about 10 percent of its nationwide corporate headcount.”
“PPI Surges: Food Rises Most Since ‘74 As Fuel Gains 3.7% In A Month”
“In fact, inflation at the wholesale level is pretty significant, with the U.S. Labor Department reporting its Producer Price Index (PPI) for February rose 1.6 percent, the biggest increase since June 2009.”
Food and gasoline
“The increase was led by big jumps in food and gasoline prices. The price of energy was up 3.3 percent, the fifth straight monthly increase. Food prices rose even faster, up 3.9 percent.”
Fuel prices, Energy prices, Food prices, dramatic jump in one month. Another nail in Supervalu coffin? How can SVU recover in this environment? How long before Supervalu is in Bankruptcy?
Bond Guru Dumps U.S. Debt -- Time to Panic? By Rich Smith
March 11, 2011
Bill Gross? Who's that?
“Now, maybe this doesn't worry you. So some guy is selling a bunch of bonds. So what? But this isn't just "some guy" we're talking about. According to Morningstar, Bill Gross is the "fund manager of the decade" in fixed income trading. His Total Return Fund is 5-star rated and has outperformed his competitors over the past 15 years, the past 10 years, three years, one year -- heck, name a time period and chances are Bill Gross is sitting top o' the heap….”
“Gross believes interest rates on government debt will rise. Because government debt competes with corporate debt for bond investors' money, corporations will also soon need to pay higher interest rates to raise cash….”
“The situation is more serious, however, for companies like heavily indebted supermarket chain SUPERVALU (NYSE: SVU), which will need to pay more to roll over their billions in net debt.”
This is an awesome thread... good valid points and data. I called this 3 months ago. No strategy, plan nor the right people to execute. Look at the WalMart people that have failed once they jumped of the "Big Blue Bus"... smacks of Hansen at Fleming... buzz-buzz-buzz. Someone will buy this company at a rediculously cheap mutiple- but will wait until the meat is just falling off the bones of the carcass to get the lowest price possible. Until then- this stock will tighten it's trading range and start is decent.
All I know is the only reason I go into an Albertson's is to get 1 or 2 things because I know there won't be anybody else in there and I can get in and out. Their prices are usually at least twice that of Winco or Walmart. Some of their older stores have basically become convenience stores, not supermarkets.
More of my opinions, what do you think?
Bull Market Turns Two: Losers
Steve Schaefer, Exile On Wall Street, Forbes.com Mar. 9 2011
“Of course not every stock rises and falls in concert with the broader market, and some S&P 500 components have been a losing proposition since March 9, 2009.”
“The worst performer: Dean Foods, down 48.2%. ... , Supervalu, was the S&P’s second-worst performer over the last two years, falling 43.9%.”
How do the Executives of Supervalu keep their jobs? How does the Board of Directors of SVU keep their jobs? How does Supervalu explain the excessive compensation of the top 12 executives? Didn’t Supervalu’s CEO make $10 million last year? The last 5 years SVU stock has fallen from $50 to $7.80 while the top 12 executives have given themselves enormous compensation packages, how can this happen?
Stockholders being destroyed by Supervalu, employees’ salaries cut, employee’s laid off by the thousands, employees being treated very bad, Customers’ needs not being met, Customers not shopping Supervalu stores, Major Wholesale customers leaving, Stores in deteriorating condition due to Supervalu not spending any money on them, Supervalu’s poor relationship with vendors, SUPERVALU’s Retail banners shattered to the point where there is no brand equity left, Supervalu disastrous strategy’ to get in a price war with Wal-Mart and Target,
For the last 7 years the top management of Supervalu has had a strategy of if they cut enough they could compete with Wal-Mart, that is Supervalu’s entire strategy, nothing else. And because of this they transformed Supervalu from a vibrant and profitably growing 100 year old company, into a dying company on the verge of bankruptcy.
And for that, the top Supervalu executives received outrageous compensation. Could someone explain this to me?
BREAKING NEWS: Wholesale prices rise 1.6% due to biggest jump in food costs in over 36 years
Is Supervalu just a day trading stock with big percentage ups and downs based on take over rumors? How many times in the last 2 years have we seen this SVU stock jump based on rumors just to see it dive back to the bottom?
After next quarters results are given, how low will SVU go?
Here’s my opinions, What do you think?
In the last six months Supervalu sells TLC Total Logistic Control to Ryder System, Supervalu sells India IT unit to Tata, Supervalu sells its Risk Planners insurance subsidiary to Arthur J. Gallagher & Co., Supervalu sells upscale Bristol Farms 14 store chain.
Is Supervalu selling everything they can to make their quarter’s results look better? Won’t that kill Supervalu in the long run?
As these are the profitable pieces of Supervalu that buyers want, and Supervalu has been trying to sell any of their pieces for the last two years, doesn’t this prove that Supervalu stores banners and Supervalu Wholesale are worthless?
On top of this Supervalu management keeps cutting store staff and other costs drastically, lowering cost for the quarter and making the quarters numbers look better for a couple of quarters, But in the long run it lowers Revenue, Same Store sales and Profit.
Doesn’t this make Supervalu’s quarterly results somewhat misleading? Won’t selling off Supervalu’s good pieces cause a sudden drop down the road? Is SVU management trying to cause Supervalu to go into bankruptcy?
Supervalu to sell India IT unit to Tata
SAN FRANCISCO, Sept 14 (Reuters) - Supermarket chain Supervalu Inc (SVU.N) said on Tuesday that it would sell its Supervalu India unit, which handles information technology and corporate services, to Tata Consultancy Services (TCS.BO).
Terms were not disclosed, but Supervalu said abouta 600 of its employees currently working in its India unit will become part of Mumbai-based TCS.
(1)Who would buy any of Supervalu pieces? SVU Losing market share, negative profit, big drops in revenue, big drops in same store sales, even Save A Lot has negative same store sales, at war with WMT Wal-Mart and TGT Target, rising gas prices, rising food prices, SVU $7 billion debt, banners have no brand equity, employees treated poorly, no strategy,
(2)How did management in the last 7 years take Supervalu from a good company to the terrible condition it is in now?
(3) The question that has been asked a lot and never answered, Why did management receive compensation in the tens of millions while the company sunk and is still sinking?
6-Mar-11 01:28 pm storewander3
the Save a Lot concept is terrible. I don't know why anyone would shop there. Prices aren't very good, selection is poor, perishables don't look good. It is sure no Aldi, not in price, not in mix, and not in quality. This company hanging its hat on Save a Lot is a risky bet.
6-Mar-11 07:49 pm johndrillock
Again, the banners all need major capital expenditures. Each one offers nothing but mediocrity. They are caught in the middle and it's not a good place to be. They're not upscale nor are they "low price leaders". None have distinguished themselves in the markets they operate. Pricing is out of control. And, I agree with a previous poster that Sav A Lot, the concept as it exists now, is not what will carry SVU. Sav A Lot has limited appeal, pricing is nothing to get excited about and yes, Aldi will clean their clock in any market the two shall meet. All banners are losing market share and the "crown Jewell" in Illinois will now have to compete with WalMart Supercenters. I don't believe the dividend is safe and I don't think SVU has a clue how to revive or what to do with Shaw's and Acme. Shopper's Warehouse is another headache although they may benefit from A & P's issues. Then when you read there are issues with Cub Foods in Minnesota where SVU has ruled .... take your hard earned dollars and look elsewhere.
My Humble Opinion on the Target Rumors.
Target is not now, nor ever will buy Supervalu.
Target already has its own distribution system, is becoming self-distributing.
TGT has already been taking away a large part of their business from Supervalu Wholesale and using their own distribution systems.
Supervalu’s grocery stores are too small to convert into a Target store.
Target and Wal-Mart do not want Grocery only stores. They also want to sell General Merchandise and Apparel in their stores.
Target is successfully using their resources to expand their grocery in their stores in the Unites States, and take business away from Supervalu and force them into bankruptcy.
Target is using their resources for a big expansion in Canada. Target,” which currently has no stores outside the United States, plans a major push into Canada in the next two years. In January, it bought the leases of up to 220 Zellers stores, a discount Canadian retail chain, and it plans to convert most to Target stores.”
No one, not even Target TGT or Wal-Mart WMT wants to take on Supervalu’s SVU $7 billion in debt.
Every potential buyer of SVU is going to look at the disaster when Albertsons bought American Stores and the catastrophe when Supervalu purchased Albertsons. Any potential buyer of Supervalu will run away.
“Why does Target have an interest in buying SVU when according to many posters here they are eating SVU's lunch and eventually will put SVU into brcy?” bigbear.2010
Supervalu “They've got some banners with serious problems from serious sales declines to outdated facilities. Acme and Shaw's are an albatross and when you read that CUB in Minneapolis has problems along with pricing problems at Jewell, who'd want 'em? Target doesn't need SVU as they've got the bucks to go it alone. Meanwhile, WalMart waits in the wings. Sav A Lot????not impressive at all especially when identical formats open nearby such as Aldi. Hooking up with RAD is like the blind leading the blind. Both have negatives. What's left?” johndrillock
“I must admit that Rad and SVU linking up is a disaster. Two poorly run companies that have no strategy. Remember Fleming and KMart? A real juggernaut and both are gone. Hmmmm sounds a lot like SVU and Rad.....” supervguy
Supervalu opening 5 Save-A-Lot stores in Chicago, “With the openings, Save-A-Lot will operate 13 Chicagoland stores. The company expects to open five additional locations in the greater Chicago area by February 2012” ST. LOUIS--(BUSINESS WIRE).
How much business will they take away from Supervalu’s Jewel Osco? Will starting a low price war with Aldi , Costco and Wal-Mart in Chicago hurt SVU Jewel Stores? How will the SVU vs WMT vs TGT vs Aldi vs Costco war end?
Small change looms large in Chicago's grocery battle
Jewel parent Supervalu opening 5 Save-A-Lot stores on South Side
By Emily Bryson York, Tribune reporter February 21, 2011
“Supervalu Inc., the supermarket giant that owns Jewel-Osco, is opening five Save-A-Lot discount grocery stores on the South Side this week. It's also closing a Jewel store, signs of the rapidly changing and increasingly cutthroat grocery business.”
“Aldi Inc., another discounter, is also opening a store this week in Harwood Heights, with at least four more to come by year-end. Aldi has opened more than 35 new Chicago stores in the last five years.”
“Times have been very tough for Minneapolis-based Supervalu, which is under tremendous pressure from Walmart and other chains that offer lower prices. The company's sales are in decline, and it is fighting to preserve Jewel's customer base. It has acknowledged that the chain's prices are too high.”
“Chicago is considered a key battleground for the changing grocery landscape. Jonathan Feeney, an analyst with Janney, wrote in a December research note that any major grocery player, or any new store format, should test the Chicago market first to see how it stacks up against Walmart, Costco, Aldi and Whole Foods.”
“Walmart has been pushing to open stores in urban areas as well. Last month, Walmart U.S. CEO Bill Simon announced, with first lady Michelle Obama on hand, that the company was working to make healthy eating more affordable.”
“Aldi, which has 198 Illinois locations, is building stores on the South Side, but the company has also opened groceries in North Side neighborhoods such as Edgewater and suburbs such as Skokie.”
“The picture is not so rosy for big grocery chains like Jewel and Dominick's, which are caught between low-price guarantees and the most premium offerings. “