US retailer Supervalu surged the most in more than a year after saying it’s considering spinning off the Save-A-Lot grocery-store chain to focus more attention on its food-distribution business. However, it jumped 11 percent on Tuesday’s early trade to 8.18 dollars. The division in the first quarter accounted for $1.4 billion in sales.
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The company owns supermarket chains such as Fresh Farm, Cub, and Shop n’ Save.
“Save-A-Lot is a business with great growth prospects”, said Supervalu CEO Sam Duncan in a conference call Tuesday, adding that the new stores will help it compete with other discount retailers.
Except for the historical and factual information contained herein, the matters set forth in this news release, particularly those pertaining to SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as “estimates”, “anticipates”, “expects”, “projects”, “plans”, “intends” and similar expressions are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Now, SUPERVALU believes that it can do the same thing by narrowing its scope even further, and given the particular success that Save-A-Lot has had and the huge role the unit has played, the company hopes that it can persuade investors in an initial public offering or other sale to reward a separately traded Save-A-Lot with a healthier valuation. Fees earned under transition services agreements in the first quarter were $64 million compared to $58 million a year ago.
Supervalu Inc.’s same-store sales in its retail food segment dropped 0.3 percent. SuperValu posted revenue of $5.41 billion in the period, which met Street forecasts.
Shares of SuperValu soared more than 15% in mid-morning trading on the New York Stock Exchange on July 28 from the previous close of $7.36.
Retail food division sales of $1.5 billion improved by 3% with comps down by 0.3%.
Analysts on average had expected a profit of 20 cents per share and sales of $5.39 billion, according to Thomson Reuters I/B/E/S.
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The company reported 61 million dollars as profit or 23 cents per share.
