SUPERVALU (NYSE:SVU) Earnings
SUPERVALU (NYSE:SVU) has been busy making considerable multiple yet significant changes. It has gotten rid of its most popular store chain and is now emphasizing on its capital structure to provide stability to the company and its finance sheets. Second quarter earnings revealed major progress, but the question is- would that keep the investors happy? More so, will that keep SUPERVALU (NYSE:SVU) happy? SUPERVALU (NYSE:SVU)’s revenue increased by 1.8 percent from last year, making $4.02 billion.
Second quarter earnings were also better than the year over year predictions made by analysts. SUPERVALU (NYSE:SVU) reported net revenue of 31 million dollars, which would amount to 0.11 dollar per share; in synch with the estimates of the analysts. SUPERVALU (NYSE:SVU) isn’t quite happy about the net income figures however, even if they reported a profit. The reason is that SUPERVALU (NYSE:SVU) has achieved better numbers.
The reason their net revenue has decreased is because of the decrease in their overall profit margin- which has come down to 0.8 percent from last year’s 1 percent. When you compare SUPERVALU (NYSE:SVU)’s profit margin to the profit margins of other grocery chain’s, you’ll find that it’s below the average margin which is something SUPERVALU (NYSE:SVU) should be vary of. A closer inspection of SUPERVALU’s (NYSE:SVU) financial books would tell you that its segments are divided into two major parts.
The Save-A-lot segment has been gaining share pretty big and fast, up to 6.5 percent in comparable stores while 8.2 percent in the corporate owned store. Compare this to retail food segment, which includes shoppers food, cub foods etc SUPERVALU (NYSE:SVU) has upped only 0.4 percent. These are quite polarizing numbers for a company whose segments are not so different from one other. SUPERVALU (NYSE:SVU) also did some business with its independent supply business unit, distributing food items to locations that are not the company’s property.
Independent supply sales fell from 1.82 to 1.1 percent however. SUPERVALU (NYSE:SVU) currently is poised to buy over 18 Rainbow Food stores in Minneapolis and has paid over 35 million dollars for it. SUPERVALU (NYSE:SVU) needs to gain the trust of its long term investors who aren’t quite happy with the fact that SUPERVALU (NYSE:SVU) isn’t generating any major profits. Investors expect a handsome return on the shares they have purchased and unless SUPERVALU (NYSE:SVU) wants to lose its investors, it better start working on operations which can generate large profit numbers instead of scrapping to make ends meet.
SUPERVALU (NYSE:SVU) also has to focus on only those operations which are capable enough to give you large profits. Executives at SUPERVALU (NYSE:SVU) said that the company will invest money gained from Save-A-lot segment into future projects which will be bigger in scope and lucrative in return. Once SUPERVALU (NYSE:SVU) becomes a surging stock instead of a forsaken one, the profits will start pouring in by themselves.