Supervalu Exceeds Private Label and Earnings Expectations in Q1

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August 2, 2011

Supervalu reported 19 percent store brands sales penetration in the first quarter of 2012, up 90 basis points year over year, and expects to increase penetration 1 percent annually for the next three years.

Craig Herkert

“We know that private brands are an important option for cost-conscious customers, and our growing collection of over 5,000 SKUs has proven to be a good way of giving them great products at compelling price points,” Craig Herkert, CEO and president, said during a recent earnings call with analysts.

Its new umbrella brand, Essential Everyday, which the company began rolling out in the second quarter, is a big part of the company’s optimism around private label growth. The brand is rolling out in phases and replaces labels associated with each of Supervalu’s banners such as Albertsons, ACME, Jewel-Osco and Shaw’s. Essential Everyday is the company’s national brand equivalent and is “a great compliment to our restaurant quality Culinary Circle and our natural and organic Wild Harvest lines,” Herkert said.

The company has so far rolled out 140 Essential Everyday SKUs in three categories -- cereal, pasta and pasta sauces. Also launched under the Shoppers Value line were individually-sized frozen pork, poultry and beef items. “Each product is priced at $1, and they've done very well for us,” he said. “As a result, we quickly rolled these items out to all of our traditional stores and our plans to introduce a total of 80 new items under the Shoppers Value label this fiscal year.”

Five varieties of Chill Out private label wine, retailing for less than $6 a bottle, also were introduced in the first quarter. “Our shoppers really love this product, and sales are tracking meaningfully ahead of expectations…we estimate that this new line has added an incremental 40 percent to our sales within the category,” Herkert reported.

Supervalu exceeded Wall Street expectations for the quarter with a 10.4 percent profit increase despite a 3.5 percent revenue decline. Same store sales declined 3.9 percent for the quarter, but Herkert said comparables “are improving according to plan.” Net earnings of $74 million were posted on sales of $11.1 billion for the quarter ended June 18.

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