SuperValu Plans to Double Discount Chain

SuperValu Inc. (Minneapolis), one of the largest U.S. supermarket chains, says it plans to double the size of its discount-chain Sav-A-Lot during the next five years. The company plans to invest $75 million in the effort, which is part of a bigger vision being implemented by the company's new ceo Craig Herkert, a former Wal-Mart executive, called America’s Neighborhood Grocer.

As part of the effort, SuperValu is cutting its quarterly dividend to 8.75 cents a share from 17.5 cents a share, effective for the payment to shareholders of record on March 1.

For the second quarter ended September 12, SuperValu reported net sales of $9.5 billion and net earnings of $74 million. Same-store-sales have been negative for six straight quarters, declining 4.8 percent for the second quarter.

“American consumer shopping habits have changed probably forever. I don't think we are going to wake up in a few months and everybody will be back to 2006. We have to make sure we get our pricing right,” Herkert said in a conference call.

Sav-A-Lot offers shoppers savings of up to 40 percent compared to traditional supermarket chains and stocks about 3000 frequently purchased items. About 75 percent of the chain’s stores are franchised to licensees.

“As we move into the last half of the year, we will place intense focus on in-store execution and merchandising programs,” says Herkert. “I’m confident that our strategy to provide shoppers with enhanced value and other changes we are now making, will allow us to compete more effectively.”

SuperValu operates 4300 grocery stores under the retail banners Acme, Albertsons, bigg’s, Bristol Farms, Cub, Farm Fresh, Hornbacher’s, Jewel-Osco, Shaw’s/Start Market, Shop ‘N Save and Shoppers.