Citi analyst says Supervalu needs to sell assets

Citi analyst says Supervalu needs to sell assets to fund turnaround

Associated Press

NEW YORK (AP) -- A Citi Investment Research analyst on Friday said she thinks struggling supermarket chain Supervalu Inc. will need to sell some assets to bankroll its turnaround efforts.

THE OPINION: Analyst Deborah Weinswig said the company's Save-A-Lot and Jewel-Osco chains were the most attractive big assets that could go up for sale. But she noted that Supervalu, which also owns Albertson's, might not be able to find buyers at the right price.

As traditional supermarkets face increasing competition from big-box retailers and drug stores, Supervalu has tried to put a heavier emphasis on attracting shoppers with lower prices. The efforts have failed to take hold so far.

Late last month, the Eden Prairie, Minn.-based chain fired its CEO just weeks after reporting a dismal first quarter. The company also suspended its dividend and announced plans to review its business, suggesting it could put itself up for sale.

Chairman Wayne Sales, who was tapped as the new CEO, vowed to move more quickly on cutting prices and make "tough decisions" regarding cost cutting.

In her note Friday, however, Weinswig noted that intensifying competition could blunt Supervalu's strategy of lowering its own prices. She lowered her price target $3 from $4 and affirmed her "Neutral" rating on the stock.

THE STOCK: Shares fell 2 cents to $2.40 in morning trading. The stock is down 70 percent in the year to date.

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