Supervalu halts dividend, weighs its options
This story has been updated to correct
SAN FRANCISCO (MarketWatch) -- Supervalu, dragged down by three years of slumping sales, said late Wednesday it's suspending its dividend, slashing spending and reviewing "strategic alternatives", a signal to Wall Street that the supermarket chain is putting itself on the block.
Supervalu (SVU) shares, booted from the S&P 500 Index in May, sank 27% to $3.85 in after-hours trades.
"It is essential that we move even more aggressively to lower prices, and anticipate and respond to competitor actions," Supervalu CEO Craig Herkert said in a statement. "These are bold but necessary moves, which will position Supervalu for success in this increasingly competitive environment."
Since the 2008 economic downturn, Supervalu has struggled to lower its shelf prices fast enough and convince consumers to shop its stores. Declines in same-store sales have accelerated for three straight years, while the grocery chain has lost more than $2 billion since April 2010.
Supervalu's market share also has shrunk due to stiffer competition from the likes of Wal-Mart (WMT) and Kroger (KR) .
Minnesota-based Supervalu runs chains Albertsons, Jewel-Osco, Shaw's and Save-A-Lot. The supermarket operator has long been rumored to be a target of private-equity shops. On Wednesday, it said Goldman Sachs and Greenhill & Co. were hired to conduct a review of strategic alternatives.
Supervalu said it plans to cut $250 million in administrative and operational expenses through 2014, which likely will result in job cuts.
In addition, the supermarket chain is slashing capital expenditures and stepping up plans to pay down debt. Supervalu said it has less than $1 billion in debt coming due the next two years.
For its fiscal first-quarter ended June 16, Supervalu posted a profit of $41 million, or 19 cents a share, down from $74 million, or 35 cents a share, in the same period last year. Revenue fell 4.5% to $10.6 billion.
Analysts surveyed by FactSet had estimated earnings of 37 cents a share on revenue of $10.61 billion.
Supervalu said identical-store sales for its hard-discount Sav-A-Lot chain fell 3.4%, while its traditional chains posted a decline of 3.7%.
Supervalu had been paying a quarterly dividend of 9 cents a share.
, 
, 
, Copyright ©2013. All rights reserved.