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. It also has more than 1,330 owned and licensed Save-A-Lot grocery stores, which hold the #1 spot (by revenues) in the extreme-value grocery category. 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.
SUPERVALU's headquarters is in Minnesota, most Save-A-Lot stores are in the eastern and southeastern US, 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.
The company reports its operations as independent business, retail food, and Save-A-Lot) which the company is considering spinning off). 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. Save-A-Lot's 1,330+ stores in nearly 40 states make up the rest.
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.
SUPERVALU is putting its money behind its successful Save-A-Lot format by expanding the extreme-value chain's reach through new store development and growth of its licensee network. Save-A-Lot's hard discount format operates or licenses 1,350 stores. The company intends to strengthen this brand through merchandising and marketing changes that are being rolled out. It has begun introducing a limited number of national brands to broaden Save-A-Lot’s overall customer appeal and is also revamping its private brands portfolio to bring a new brand to Save-A-Lot, America’s Choicesm, which will span most categories.
In 2015 the company announced that it is exploring a separation of its Save-A-Lot segment, and as part of that process it had begun preparatons to allow for a possible spin-off of Save-A-Lot into a stand-alone, publicly traded company. The separation of Save-A-Lot business could allow Save-A-Lot and SUPERVALU to better focus on their respective operations, and pursue strategies specific to their business characteristics and growth potentials.
In 2014 the company streamlined its wholesale organization by consolidating three regions into two, forming new East and West teams located in Virginia and Minnesota, respectively.
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.