* Q3 EPS 62 cents vs Wall Street view 60 cents
* Plans cost cuts, bigger debt pay downs
* Sees FY09 EPS of $2.80-$2.90 excluding one-time charges
* Shares up 13.3 percent (Adds analyst comment, background on Albertson's acquisition; updates share activity)
LOS ANGELES, Jan 7 (Reuters) - Grocer Supervalu Inc (SVU.N) posted a better than expected profit, excluding a major impairment charge, and laid out plans to cut costs and pay down debt on Wednesday, sending its shares up 13.3 percent.
The Minneapolis-based owner of the Albertsons, Jewel-Osco, Shaw's and Save-A-Lot chains said it will close 50 stores and trim capital expenditures and investments in store remodeling. It will also increase its debt pay-down to $600 million next year from $400 million in fiscal 2009.
The moves come as cash-strapped consumers try to cut grocery bills by switching to lower-priced store brands, generic drugs and less expensive cuts of meat. As a result, Supervalu lowered its 2009 earnings forecast.
Morningstar analyst Mitchell Corwin said investors were relieved by earnings that topped Wall Street expectations and the move to preserve cash and cut costs.
"I would not characterize these developments as good news," he said. "I would characterize this as not as bad as some feared."
Supervalu bought more than 1,100 Albertson's Inc stores in 2006 and has more than $8 billion in debt -- a high level of debt relative to its rivals.
Pali Research analyst Bob Summers said the 2010 capital spending cuts should improve the company's free cash flow enough to remove liquidity concerns related to $700 million in August debt maturities.
Supervalu posted a loss of $2.94 billion, or $13.95 a share, for the fiscal third quarter ended Nov. 29, compared with a year-earlier profit of $141 million, or 66 cents a share.
The loss included noncash impairment charges of $3.3 billion as the company wrote down the value of some assets.
Excluding the charges, earnings were 62 cents a share, ahead of analysts' average estimate of 60 cents, according to Reuters Estimates.
Supervalu did not issue a forecast for its fiscal year ending February 2010, but Chief Executive Jeff Noddle said the current consensus estimate by analysts for earnings of $2.69 per share "would probably be at the bottom end" of the company's forecast range.
A HELP TO RIVALS?
But while investors cheered the results and cost cuts, some analysts said Supervalu's cutbacks could ultimately help rivals such as Kroger Co (KR.N) and Safeway Inc SWY.N.
"Supervalu looks to be surrendering ... More store closures and fewer remodels means there is less competition from (Supervalu)," said Jefferies & Co analyst Scott Mushkin.
Grocery stores like Supervalu, which has about 2,500 stores, face competition from big-box retailers such as Wal-Mart Stores Inc (WMT.N), which are expanding food sales.
Net sales edged down to $10.17 billion from $10.21 billion a year ago. Retail food net sales were flat at $7.9 billion.
Closely watched identical-store sales fell 0.5 percent. Supervalu's identical-store sales include results from outlets operating for four full quarters, including store expansions and exclude fuel sales. Gross profit margin rose to 22.4 percent from 22.2 percent.
The company cut its forecast for fiscal 2009 earnings to between $2.80 and $2.90 a share, before one-time items, down from a previous forecast of $2.90 to $3.00.
Supervalu said it is cutting its fiscal 2010 capital spending plan to $850 million compared with an expected $1.2 billion in fiscal 2009.
The company's shares were up $2.01 at $17.10 in afternoon trading on the New York Stock Exchange, still far below the 52-week high of $35.91. Kroger shares were up about almost 2 percent and Safeway gained around 4 percent. (Additional reporting by Brad Dorfman; Editing by John Wallace, Andre Grenon and Matthew Lewis)