SUPERVALU understands the lure of a good deal. The company offers wholesale grocery distribution and logistics services to about 1,800 independent retailers and 184 military commissaries in the US and overseas. It supplies brand-name and private-label goods in every price range. SUPERVALU's retail operations include nearly 200 regional grocery stores under the Cub Foods, Shoppers Food & Pharmacy, Shop 'n Save, Farm Fresh, Hornbachers, and two Rainbow banners. All told, the company covers about 40 US states through nearly 20 distribution centers. In 2016 the company sold its Save-A-Lot grocery stores to investment firm Onex Corp. for $1.36 billion in cash.
SUPERVALU's headquarters is in Minnesota and its distribution business serves most of the nation and military commissaries in the US, Puerto Rico, the Azores, Cuba, Guam, Korea, Japan, and in Europe.
In fiscal 2016 (February year end), the company reported its operations as independent business, retail food, and Save-A-Lot (sold in late 2016). The largest segment, accounting for 45% of revenues, is the independent business group, or the distribution and logistics operations. It serves 1,800 retail customers in 40 states from 18 distribution centers. SUPERVALU's wholesale customers include conventional and upscale supermarkets, combination food and drugstores, supercenters, convenience stores, limited assortment stores, and e-tailers. SUPERVALU offers its retailers private labels in every price range and in virtually every store category, from the value-priced Shoppers Value brand to the premium Preferred Selection and organic Wild Harvest lines. SUPERVALU also offers retailers support services, such as store design and construction.
Retail food, or all the regional grocery stores, includes nearly 200 stores and contributes about 27% of revenue.
In 2016 the company sold Save-A-Lot to Onex Corp. for $1.36 billion. Under SUPERVALU's ownership, the 1,330 owned and licensed Save-A-Lot grocery stores held the #1 spot by revenues in the extreme-value grocery category and operated in nearly 40 states.
In fiscal 2016 (February year end) SUPERVALU's net revenues decreased by 2% due to the declines in wholesale, retail, and discontinued operation. Wholesale sales were negatively impacted in by the loss of distribution to certain Albertsons stores in the Southeast along with softer year-over-year sales to existing customers. Retail revenues decreased by 2.4% in 2016 due to negative identical store sales, lower sales from closed stores, and lower fuel sales, offset in part by higher sales from acquired and new stores.
Save-A-Lot net sales increased $61 primarily due to higher sales from new corporate stores, increased sales from new licensee stores, higher sales from corporate stores that were acquired and converted to licensee stores and of a rise in sales at existing corporate stores, offset in part by lower sales from lower sales to existing licensees, stores that were disposed of by licensees, licensee stores that were converted to corporate stores, and corporate stores that were closed.
SUPERVALU's net income decreased by 7% due to lower net sales and an increase in income tax provisions.
In 2015, cash from operating activities increased by 4% due to changes in inventories and receivables.
To focus its resources on its independent and other retail businesses, SUPERVALU sold its Save-A-Lot chain to Onex Corp. for $1.36 billion. Initially considering spinning the chain off into a stand-alone, publicly traded company, SUPERVALU ultimately elected to sell to a private equity firm. It used cash from the sale to pay down about $750 million in outstanding debt.
Mergers and Acquisitions
In 2016 SUPERVALU expanded its wholesale business by agreeing to acquire 22 Food Lion grocery stores that are being sold in connection with the merger between Ahold and Delhaize. The 22 Food Lion stores are located in northern West Virginia, western Maryland, south central Pennsylvania and northwestern Virginia. The acquired stores will be converted to SUPERVALU’s Shop ‘N Save format and at least initially be operated by SUPERVALU.
After a year of divestments in 2013, SUPERVALU returned to acquisition mode in May 2014 with the purchase of 18 Rainbow Foods stores in the Twin Cities (Minnesota) area from rival Roundy's. SUPERVALU, which was part of a consortium acquiring the stores, will convert about 10 of them to its Cub Foods format.