Inside Supervalu’s 4Q16 Sales Plunge

For What It's Worth: Supervalu's Fiscal 4Q16 Results Are In

(Continued from Prior Part)

Supervalu’s top-line in fiscal 4Q16

In fiscal 4Q16, Supervalu (SVU) reported a 9.6% YoY (year-over-year) decline in its top line to $3.95 billion. The drop in total sales was a result of lower revenues from all of the company’s business segments.

Wholesale segment

Revenue from SVU’s Wholesale segment fell by 4.8% YoY (excluding the additional week in fiscal 2015) to ~$1.7 billion in 4Q16. This was due to lower traffic, lost accounts, and a decline in sales to existing customers. After including the additional week, wholesale segment’s sales only declined by around 11% during the quarter.

Save-A-Lot segment

In fiscal 4Q16, Save-A-Lot’s net sales declined 0.8% YoY (excluding the additional week in fiscal 2015) to ~$1.1 billion in 4Q16 on account of a 2.2% decline in the identical store sales and the negative impact of store closures. Including the additional week in 2015, the decline was 7.1%.

Retail Food segment and TSA fees

SVU’s net sales from Retail Food declined by 2.6% YoY to $1.11 billion in 4Q16, excluding the additional week in fiscal 2015. The decline was a result of a 3.9% fall in same-store sales, which was partially offset by sales from new stores.

Fees earned under transition services agreements (TSA) in the fourth quarter stood at $44 million compared to $45 million last year, excluding $4 from the additional week last year.

Peer sales

SVU has been the slowest-growing supermarket over the last couple of quarters. By comparison, Sprouts Farmers Market (SFM) has been the fastest-growing supermarket, with sales growth of ~27% YoY for three months ending January 3, 2016. The Fresh Market (TFM) grew by 8.2% in its last reported quarter (quarter ending January 31, 2016), while supermarket giant Kroger (KR) grew by 3.8% for the comparable quarter.

Notably, SVU is the only big supermarket that reported a decline in sales (-9.6% for the quarter ending February 27, 2016). SVU is included in the holdings of the SPDR S&P Retail ETF (XRT) along with supermarket peers Kroger (KR), Sprouts Farmers Market (SFM), and The Fresh Market (TFM). Together, they account for 4.1% of the fund’s total holdings.

Continue to the next part for a discussion of SVU’s profitability and margins.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - How Did Supervalu Fare with Earnings and Sales Expectations?

• Part 3 - Understanding Supervalu’s Tanking 4Q16 Margins

• Part 4 - What’s behind Supervalu’s Underperformance on the Stock Market?