Food for Thought

Supervalu Inc. (Eden Prairie, Minn.), the nation's 10th largest supermarket retailer, has announced it will cut 7.3 percent of its workforce, eliminating 4500 jobs, and will pull out of some retail markets.

The company, which operates nearly 1200 stores under the Cub Foods, Shop'n Save, bigg's, Save-A-Lot, Scott's Foods, Laneco, Hornbachers, Shoppers Food Warehouse, Metro and Farm Fresh names, is also the nation's largest food wholesaler (supplying about 5700 grocery stores in 48 states with brand-name and private-label goods).

The cutbacks follow the loss of a food-distribution contract with Kmart that is expected to reduce revenues this year by $1.7 billion. However, said Jeff Noddle, Supervalu president and coo, in making the announcement, “we are actively rebuilding our retail business.” During fiscal 2001, the company increased square footage by 5 percent, opening 117 new stores and acquiring five stores; 45 were closed. New store openings for fiscal 2002 are projected at 10 to 15 superstores and 100 to 120 limited assortment stores, with capital spending projected at approximately $475 million for the year.

The company's comparable sales for the year were negative four percent, and negative five percent in the fourth quarter. It did not indicate which retail markets would be affected, but chairman and ceo Mike Wright noted that, “we encountered intense competition in certain retail markets in Illinois, Indiana and Ohio that was the principal cause of an earnings shortfall during the last half of the year.”