To cut costs, Supervalu will close 50 stores

Albertsons' parent company, Supervalu, will close 50 stores in strategic cost-cutting moves this year, its chairman said Wednesday.

Many stores being considered for the ax were among those Supervalu acquired when Albertsons was sold in 2006, Chairman and Chief Executive Officer Jeff Noddle told the Idaho Statesman. But he would not say where the stores are located or whether any are in Idaho.

Supervalu closed about 25 stores this year, according to Chief Financial Officer Pam Knous - a normal number for a national retailer with more than 1,100 stores, she said.

The nation's third largest grocery retailer notched a $2.9 billion loss in its third quarter, which ended Nov. 29. The Minnesota company has faced increasing competitive pressure from discounters like Wal-Mart and slower sales because of changing consumer behavior.

Sales are expected to remain steady into next year, but "price has become a key criteria when customers are choosing a place to shop," Noddle said.

Falling sales in impulse-buy areas like flowers and coffee bars cut sales. As Americans cut back on driving, the number of trips to grocery stores fell, he said.

To boost sales, Noddle told analysts that the chain will invest in more discounts, promotions and targeted marketing. Albertsons has started offering limited double coupons in its Boise newspaper advertising inserts.

To cut costs, Supervalu will seek improved labor efficiency and loss prevention, he said.

Supervalu reported net sales of $10.2 billion in its third fiscal quarter, which ended Nov. 29. Same-store sales were down 0.5 percent from the same quarter a year earlier, excluding fuel sales.

The third-quarter loss was the result of a $3.3 billion noncash charge-off of intangible assets taken to reconcile the stock price - $11.91 at the end of the quarter - with the company's book value, which was $29.74 at the same time.

Supervalu's stock price has fallen as from a 52-week high of $35.91 to as low as $8.59. The stock closed Wednesday at $16.33, up 8 percent.

Adjusted for the charges, earnings for the quarter were $132 million, or $0.62 per diluted share.

"It's still good to be in the grocery business," Noddle told analysts during a conference call.

Noddle offered little hope for shoppers seeking price relief early in 2009, though.

He said the first six months of 2009 will be "a battleground" over food prices as vendors try to boost returns and retailers fight for lower costs.

"I expect to see easing inflation as lower fuel and commodity prices work their way into the system in the second half of the year," Noddle said.

Supervalu maintains a strong presence in Boise, employing about 2,000 people here even after closing the corporate headquarters of Albertsons. It just completed a 26,000-square-foot expansion of its automated data center off Emerald Street.

"It is the primary data processing center for all of Supervalu," Noddle told the Statesman.

Supervalu also maintains a technology division and its Intermountain Region offices at the former Albertsons office complex.

It sponsors the Boise Open charity golf tournament and has pledged to continue that for the next two years.

Brad Talbutt: 672-6737