NEW YORK (AP) -- Analysts said Thursday that Supervalu Inc.'s plan to close 60 underperforming stores should boost its profits down the road.
The struggling grocery store operator said Wednesday that the closures include 18 Albertsons in Southern California and eight Albertsons in Washington and Oregon. They also include four ACME stores in Pennsylvania, New Jersey and Maryland, and 22 Save-A-Lot stores, spread across seven states.
Eight others to be shut were not disclosed because of ongoing contract discussions. Most of the stores are expected to close by Dec. 1.
The company did not say how many employees would be affected.
Supervalu says it expects the store closures to result in a noncash, pre-tax charge of $80 million to $90 million for its fiscal 2013. But the closures are expected to generate $35 million in cash in the next year and between $80 million and $90 million in the next three years.
Jonathan Feeney, an analyst with Janney Capital Markets, said the closures could slightly boost the company's fiscal 2013 and 2014 results, and generate $15 million to $20 million in annual cash flow once completed.
"The announcement, small in scope relative to Supervalu's structural problems, provides some limited support to our thesis that big segments of certain banners are worth more closed immediately than open — not candidates for sale," Feeney wrote in a note to investors backing his "Neutral," or "Hold" rating for the company.
Cantor Fitzgerald analyst Ajay Jain backed his "Buy" rating for Supervalu, calling the closures a "very small step" toward boosting the company's value.
"The much larger question in relation to the on-going strategic review process remains whether Supervalu can identify suitable buyers for major pieces of its retailing and wholesaling operations (or for the entire integrated business)," Jain wrote in his note.
Supervalu and other supermarket chains have struggled in recent years amid intensifying competition from big-box retailers such as Target Corp. and Wal-Mart Stores Inc., as well as dollar stores and drugstores that are expanding their grocery sections and luring customers away with lower prices. But even among its peers, Supervalu has been a laggard and has failed to adapt to the changing environment.
In June, Supervalu said its first-quarter profit fell by nearly half, as revenue tumbled. The Eden Prairie, Minn.-based grocer suspended its dividend and said it was reviewing its options with financial advisers, a process that typically includes the possibility of selling the company. The next month, the company fired CEO Craig Herkert and hired its chairman, Wayne Sales, to lead the turnaround effort.
Supervalu shares rose 7 cents, or 3.1 percent, to $2.35 in premarket trading. The stock has traded between $1.68 and $8.75 in the past 52 weeks and will start Thursday's session down nearly 72 percent since the start of the year.