Net earnings fall 24% in 2Q17
In the second quarter, which ended September 10, 2016, Supervalu (SVU) reported a net profit of $30 million from continuing operations. After excluding $6 million of supply agreement termination fees and $4 million of store closures and potential Save-A-Lot separation costs, its net profit stood at $28 million, down ~24% YoY (year-over-year).
Gross margins improve slightly in 2Q17
The company’s gross margin improved by ten basis points to 14.5% of net sales in 2Q17, mainly due to better product margins and more corporate Save-A-Lot stores.
Operating profit fell 16% on a higher SG&A rate
Operating profit was, however, down 6.4% to $88 million as SG&A (selling, general, and administrative) expenses increased to 12.4% of sales, compared to 11.9% last year. While SG&A expenses at the Save-A-Lot and Retail segments rose 160 and 200 basis points, respectively, the Wholesale segment saw a 10 basis point decline in these costs.
Comparing SVU’s operating margin to peers’
Fiscal 2017 outlook
Full-year adjusted EBITDA (earnings before interest taxes, depreciation, and amortization) are predicted to fall 5% YoY in fiscal 2017. This fall includes the results of the Save-A-Lot business, which the company recently sold to Onex.
ETF investors seeking exposure to SVU can consider the iShares Morningstar Small-Cap Value ETF (JKL), which invests 0.24% of its portfolio in the company.
Read the next part of this series to about Supervalu’s stock market performance.