* Q4 EPS 38 cents vs Street view 35 cents
* Sees 2013 EPS $1.27-$1.42 vs Street view $1.19
* Shares up more than 12 percent
By Lisa Baertlein
April 10 (Reuters) – Supermarket operator Supervalu Inc
reported better-than-expected earnings and issued a
full-year profit forecast above Wall Street’s view, sending its
shares up more than 12 percent in early trading.
Expectations were very low ahead of the quarterly report
from Supervalu, which has been losing market share to Wal-Mart
Stores Inc, Kroger Co and others and grappling
with a large debt load.
The jump in Supervalu shares appeared to be a classic short
squeeze, with those who bet against the stock scrambling to
cover their positions. Short-sellers have piled into Supervalu,
making it the third most shorted stock on the S&P; 500 after
GameStop Corp and Sears Holdings Corp. Almost
43 percent of Supervalu’s shares outstanding are being held
short, according to Data Explorers.
Supervalu “still has a long way to go in executing its
turnaround, but for today at least, we believe the stock should
clearly benefit from what has been a perfect storm for an epic
short squeeze,” Cantor Fitzgerald analyst Ajay Jain said in a
client note.
Shares of Supervalu, the third-largest U.S. supermarket
operator, were up 12.6 percent at $5.99 in early trading on the
New York Stock Exchange.
‘BETTER THAN FEARED’
The Minneapolis-based owner of grocery chains such as
Jewel-Osco, Albertsons and Save-A-Lot has issued a string of
disappointing earnings results, and Tuesday’s results did little
to convince analysts that a promised turnaround had yet taken
hold.
“The only way you can really characterize this is ‘better
than feared,'” Susquehanna Financial Group analyst Bob Summers
said of Supervalu’s fourth-quarter results.
“I don’t think this quarter is an ‘aha’ moment to say
they’ve turned,” he said.
Supervalu reported a net loss of $424 million, or $2 per
share, for the fiscal fourth quarter ended Feb. 25, including
asset impairment charges and costs related to previously
announced layoffs.
That compares with a year-earlier profit of $95 million, or
44 cents per share.
Excluding one-time items, Supervalu earned 38 cents per
share, topping analyst’ average forecast of 35 cents, according
to Thomson Reuters I/B/E/S.
Net sales fell 5 percent to $8.23 billion, below analysts’
average forecast of $8.31 billion.
Identical-store sales excluding fuel fell 1.9 percent, less
than the roughly 3 percent drop analysts expected. Supervalu’s
identical-store sales, a key performance measure, show results
from supermarkets operating for four full quarters, including
store expansions and excluding fuel sales.
Gross profit margin for the fourth quarter fell to 22.8
percent of net sales from 22.3 percent due to price-lowering
efforts, higher advertising expenses and other factors.
Supervalu is working to get its everyday pricing as low as
bigger players, including Kroger, Safeway Inc and
Wal-Mart, amid fierce competition and higher food costs.
At the same time, it has been paying off debt from its $12.4
billion acquisition of more than 1,100 Albertsons stores in
2006. That burden has hampered Supervalu’s ability to compete
more aggressively and stand out from rivals.
The company forecast fiscal 2013 earnings per share of $1.27
to $1.42, above Wall Street’s average estimate of $1.19.
