SUPERVALU to close underperforming stores
SUPERVALU Inc., Minneapolis, announced it will close approximately 60 underperforming or nonstrategic stores this fiscal year, including 38 in its retail food reporting segment and 22 Save-A-Lot locations. The majority of the stores are expected to close before Dec. 1, 2012, the end of the company’s fiscal 2013 third quarter.
“These decisions are never easy because of the impact a store closure has on our team members, our customers and our communities,” says Wayne Sales, SUPERVALU’s president, CEO and chairman. “Today’s announcement reflects our commitment to move with a greater sense of urgency to reduce costs and improve shareholder value.”
As a result of the closures, SUPERVALU expects to record a pre-tax charge of $80 million to $90 million in fiscal 2013, with all but $3 million in estimated severance costs being noncash. Of these amounts, $50 million to $55 million is expected in the company’s fiscal 2013 second quarter (ending Sept. 8, 2012), with the majority of the remainder anticipated to be recorded in its fiscal 2013 third quarter.
In addition, a pre-tax gain of approximately $10 million from the sale of departmental assets is expected in fiscal 2013 second quarter. Over the next three years, SUPERVALU estimates that closing these locations will generate between $80 million to $90 million in cash from monetizing owned real estate, eliminating cash operating losses and selling departmental assets. The company owns the real estate for approximately one-third of the retail food stores being closed. Cash generated from these actions will be used to reduce outstanding debt and for other general corporate purposes. These closures will also be accretive to net earnings.
The closures in the retail food segment include 27 Albertsons stores (19 in Southern California, including one previously announced location, and eight in the Intermountain West region), four ACME stores and one previously announced Jewel-Osco location.
Eight additional stores are included in this announcement but due to ongoing contractual discussions the specific details of each store are not being disclosed at this time. All eight are expected to close by the end of SUPERVALU’s fiscal year which is Feb. 23, 2013.
Source: SUPERVALU Inc.