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Supervalu's Essential to Bulk Up

Zacks Equity Research

Supervalu Inc. (SVU) recently announced that it will expand the portfolio of its brand ‘Essential Everyday’ to 2,700 items by 2013.

The brand currently offers 1, 200 items in 3, 300 stores across U.S. Now Supervalu plans to add 1, 500 items to the array of Essential Everyday products, thus taking the total count to 2700. Essential Everyday items are also shelved in Supervalu-owned stores like Acme Markets, Albertsons  Stores, Cub Foods, Farm Fresh  Supermarkets, Jewel-Osco Stores, Shaw’s/Star Market, Shop ‘n Save Stores.

Supervalu’s wide range of portfolio of brands is divided into three tiers, namely, premium, national-brand equivalent and value brands. Essential Everyday forms a part of Supervalu’s national brand equivalent portfolio.

Essential Everyday products comprise home goods and grocery categories, such as cereal, dairy, bread, canned goods, frozen foods, pasta, sauces, condiments, salad dressings and snacks.

Based in Eden Praire, Minnesota, Supervalu operates through three retail food store formats: combination stores, food stores, and limited assortment food stores. The combination stores refer to the combination of food and pharmacy.

The company derives majority of its revenues from the retail food segment. In order to help reverse three successive years of negative identical store sales, and re-position the company for growth, it is geared up to expand its private brand portfolio.

Apart from expanding its portfolio, the company is also striving to expand its network of stores throughout U.S. Save-A-Lot, a wholly-owned subsidiary of Supervalu, announced the opening of its full-service grocery store in Atlantic City on May 17, 2012. ACME Markets Inc., a division of Supervalu, recently inaugurated its new store in Bryn Mawr, Pa. in June 2012.

Moreover, in February and March 2012, Save-A-Lot opened three new stores in Tennessee, four in Pennsylvania, and three each in Ohio and New York. Supervalu expects to open 160 ‘Save-A-Lot’ stores by fiscal 2012.

Additionally, Supervalu plans to complete 55 to 75 store remodels in fiscal 2012. The retailer expects to open 160 ‘Save-A-Lot’ stores by fiscal 2012. During fiscal 2012, the company added 83 new stores through new store development.

Currently, we have a long-term Neutral recommendation on SUPERVALU which closely competes with The TJX Companies (TJX), which carries a Zacks #3 Rank (short term Hold rating).

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