Supervalu’s Q1 net sales drop, chain focuses on ‘8 Plays to Win’ strategy
MINNEAPOLIS — Supervalu on Tuesday reported first-quarter fiscal 2012 net sales of $11.1 billion (down 3.7% versus last year) and net earnings of $74 million (up 10.4%), or 35 cents per diluted share. Posted net earnings beat the analyst consensus of 33 cents per diluted share.
“First-quarter results reflect the progress we are making on our ‘8 Plays to Win’ strategy, and we remain on track to deliver our fiscal 2012 guidance,” Supervalu CEO and president Craig Herkert said. “A hyper-local focus [is being implemented] to help us meet the needs of today’s consumers, while reducing shrink and improving our operations.”
Those “8 Plays to Win” strategies include simplifying operations and logistics to make it easier for Supervalu to operate as one company; improving the shopper experience through more-consistent value pricing; a focus on fresh, localized merchandising and hassle-free shopping; and committing to the growth of the Save-A-Lot banner and the number of independents utilizing Supervalu’s supply chain services.
“Bottom line here is that results were better than low expectations, especially after Safeway’s disappointing quarter,” Credit Suisse research analyst Ed Kelly said prior to Supervalu’s conference call held this morning. "That being said, Supervalu’s fundamentals remain extremely challenging. … Cost control is encouraging and saving the company from much weaker bottom-line results, but Supervalu can’t cost-cut its way to prosperity.”
Economic downturn took greatest toll on Hispanics’ household wealth, research finds
NEW YORK — The bursting of the housing market bubble and the recession that followed took a greater toll on the wealth of minorities than whites, especially Hispanics, whose median household wealth plunged 66% from 2005 to 2009, according to a Pew Research Center analysis of newly available government data from 2009.
The median household wealth among Hispanics fell from $18,359 in 2005 to $6,325 in 2009. The percentage drop — 66% — was the largest among all racial and ethnic groups, according to the new report released Tuesday by the Pew Research Center’s Social and Demographic Trends project. During the same period, median household wealth declined 53% among black households and 16% among white households.
As a result of these declines, the typical black household had $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149, according to the data.
These lopsided wealth ratios are the largest in the quarter century since the government first published such data, according to Pew Research, and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession.
The Pew Research report, which provides the first look at how the Great Recession impacted household wealth, found that plummeting house values were the principal cause of the erosion in wealth among all groups. However, because Hispanics derived nearly two-thirds of their net worth in 2005 from home equity and a disproportionate share reside in states that were in the vanguard of the housing meltdown, Hispanics were hit hardest by the housing market downturn.
Among the report’s other key findings:
About one-third of Hispanic (31%) and black (35%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 23% for Hispanics, 29% for blacks and 11% for whites;
About one-quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with 6% of white households. These percentages are little changed from 2005; and
During the period under study, wealth disparities also increased within the Hispanic community. The top 10% of Hispanic households saw their share of all Hispanic household wealth rise from 56% in 2005 to 72% in 2009.
Credit Suisse: Total basket up 2.7% year over year; highest rate of price inflation in two years
NEW YORK — Financial services firm Credit Suisse tabulated total basket increases of 2.7% year over year and 1% month over month for retail.
“Our monthly pricing survey in Dallas and Chicago showed that all retailers raised prices on a year-over-year and month-over-month basis with the exception of Jewel [a Supervalu banner operating in Chicago],” Credit Suisse research analyst Ed Kelly wrote in a note published Monday.
And though recent comments from Dollar General and Walmart suggested that lower-end consumers are beginning to feel the pinch from higher costs, retailers are by and large successfully passing those price increases along to the consumer. “Thus far, the pricing environment has remained rational, although the key player to continue watching is Walmart,” Kelly noted.
That increase in product pricing is accelerating most significantly across food items, Kelly noted. “Inflation was highest in our food basket, up 6.5% year over year, an acceleration from 3.4% last month,” he wrote. Health and beauty inflation was up 0.7% year over year, versus 2.9% in May. On a month-over-month basis, food inflation totaled 2.6%; conversely, average price changes were down across health and beauty products by 0.9%.
Walgreens and CVS/pharmacy had some of the greatest pricing disparities, as compared with everyday-low-price value leader Walmart. In the Chicago market, Walgreens relative pricing was 28.3% higher than Walmart; CVS’ prices were 21.9% higher. In Dallas, CVS/pharmacy relative pricing was 30.9% higher than Walmart, and Walgreens was 25.6% higher.
That’s not altogether a bad situation for the two drug retailers tracked in the Credit Suisse pricing survey but bears watching, Kelly cautioned. “We believe that drug stores are among the best-positioned retailers to pass along inflation, but they must remain vigilant not to let their pricing gap versus other formats increase too much,” he said.