The grocery chain says it will revamp its strategy to draw consumers whose shopping habits may be changed forever by the recession.

After reporting another brutal blow to its bottom line, the company said Tuesday that it plans to double the number of Save A Lot discount stores it operates, cut prices in all its stores and reorganize its operations.

Supervalu said shoppers came into its stores less often, bought fewer items, continued to trade down to less expensive items, adhered to shopping lists and avoided discretionary purchases during the quarter.

"We will return to the principles on which Joe Albertson (and) Sam Skaggs founded their businesses," Supervalu CEO Craig Herkert said. "Know your customer and make sure everything you do addresses their needs."

Albertson founded what became the Albertsons supermarket chain with a single Boise store in the late 1930s. Samuel M. Skaggs founded what became a chain of cash-and-carry stores when he opened his first store in American Falls in 1915.

"Times are tough ... but we cannot and will not use the overall economy as an excuse," Herkert said. "Supervalu must transform itself into a business that is customer-focused, dynamic and agile enough to meet the evolving needs of customers, whatever the environment. Clearly we have not done that recently."

Supervalu said weak consumer spending and deep discounts on top of lower prices that it passed along to consumers pushed its fiscal second-quarter profit down 42 percent.

The Minnesota-based company said it earned $74 million, or 35 cents per share, down from $128 million, or 60 cents per share, in the same quarter last year. Revenue fell 7.5 percent to $9.46 billion.

"My sense is the American consumer's shopping habits have changed probably forever, certainly for a long time, and I don't think we are going to wake up in a few months and everybody will be back to 2006," said Herkert, a former Wal-Mart Stores Inc. executive who took the helm at Supervalu last spring.

Supervalu, which also owns the Jewel-Osco chain, said it will re-evaluate which brands work in which markets, cut prices to draw customers, reduce inventory to control costs, make other internal cuts and emphasize its discount chain, Save-A-Lot.

Supervalu cut its dividend by half to free up cash for this retooling.

Herkert said fixing the company will take time.

The company now expects to earn between $1.95 per share and $2.05 per share in 2010, compared with its earlier estimate of $1.95 per share to $2.15 per share.

"I'm being realistic when I say there is much need for improvement in our everyday execution; this will be a near-term imperative as we work on getting the basics right," Herkert told investors in a conference call.

The quarterly results beat the expectations of analysts polled by Thomson Reuters for 33 cents per share on revenue of $9.65 billion.

But Jeffries & Company Inc. analyst Scott Mushkin said that was largely due to a tax benefit and a change in how the company measures inventory.

The company continues to struggle and has lost market share for years at some of its chains.

Standard & Poor's Equity Research lowered its rating on shares of Supervalu to "sell" from "hold" Tuesday and said risks are high given intense continuing competition in the grocery industry.

Shares of Supervalu rose 27 cents Tuesday, closing at $17.20.

The Idaho Statesman contributed.