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What’s Expected from SUPERVALU’s Fiscal 1Q18 Results?

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Part 2
What’s Expected from SUPERVALU’s Fiscal 1Q18 Results? PART 2 OF 5

Wholesale Business to Drive SUPERVALU’s Top Line in Fiscal 2018

Evaluating SUPERVALU’s top line performance

Excluding its Save-A-Lot business, SUPERVALU (SVU) clocked total sales of $12.5 billion in fiscal 2017, a fall of 3.3% YoY (year-over-year). This fall was the result of a 3.6% fall in retail sales and a 2.9% fall in wholesale business sales.

The company closed the year on a positive note, with its fiscal 4Q17 sales rising 0.6% YoY, driven by a 3% rise in its wholesale business.

Wholesale Business to Drive SUPERVALU’s Top Line in Fiscal 2018

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Looking forward

SUPERVALU’s wholesales business is expected to deliver a solid performance in 2018. The company has a solid pipeline, and new client relationships should boost its sales during the year. The company also acquired United Grocers, a West Coast–based wholesale grocery distributor, in early April 2017.

The company’s retail business, however, is expected to continue facing headwinds. Its sales are expected to stay negative during the year as it continues to be negatively affected by rising competition and lower SNAP (Supplemental Nutrition Assistance Program) benefits. SVU’s retail comps have been negative for the last eight consecutive quarters.

How have other retailers and wholesalers fared?

Kroger’s (KR) top line rose 4.9% YoY to $36.3 billion in 1Q17. The company beat analysts’ expectations. Its same-store sales excluding fuel fell 0.2%, its second consecutive quarterly fall.

Whole Foods Market (WFM) reported its quarterly results in May. The organic food retailer’s comps remained negative, falling for the seventh consecutive quarter. Its total sales rose 1.1% during the quarter.

United Natural Foods’ (UNFI) revenue rose 11.3% to $2.4 billion in its quarterly results in June. However, the wholesaler fell $50 million short of its consensus top line estimate.

ETF investors seeking to add exposure to SVU can consider the iShares S&P Small-Cap 600 Value ETF (IJS), which invests 0.25% of its portfolio in the company.

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