UPDATE 2-Supervalu sales fall short, keeps profit view

* Q1 EPS ex-items 43 cents vs Street view of 42 cents

* Sales fall short at $11.5 bln vs Street view $11.67 bln

* Maintains adj FY EPS outlook, but lowers net forecast

* Says CFO leaving on July 30 to pursue other interests

* Shares up 2 pct (Adds CFO departure, analyst and executive comment, byline; previous dateline DETROIT)

By Lisa Baertlein

LOS ANGELES, July 27 (Reuters) - Supervalu Inc (SVU.N) posted weaker-than expected quarterly sales on Tuesday, but said it remains on track for its full-year earnings goals, as it controls margins and costs.

The company, whose shares rose 2 percent, said in a separate announcement that Chief Financial Officer Pamela Knous, 56, will leave the company on July 30 "to pursue other career interests." It expects to fill the position by the time it reports second-quarter results in October. [ID:nWNAB9748]

The operator of grocery stores such as Albertsons, Jewel-Osco and Save-A-Lot, maintained its full-year profit outlook on an operating basis but lowered its view for net income based on higher charges.

For the fiscal first quarter ended June 19, Supervalu's net income fell almost 41 percent to $67 million, or 31 cents a share.

Excluding one-time items, the company earned 43 cents a share, versus analysts' call for a profit of 42 cents a share, according to Thomson Reuters I/B/E/S.

Net sales fell to $11.5 billion from $12.7 billion last year. Analysts were expecting $11.67 billion.

Identical-store sales, a gauge of grocery performance, dropped 7.2 percent, slightly more than analysts' call for a 6.5 percent decline, Hapoalim Securities analysts Ajay Jain said in a client note. Excluding a labor dispute at Shaw's, identical-store sales would have been down 6.5 percent.

"We are disappointed with our first quarter sales performance ... We continue to control our margins well and take costs out of the business," Supervalu Chief Executive Craig Herkert said in a statement.

To that end, gross profit margin for the quarter improved to 22.5 percent of net sales, compared with 22.4 percent last year.

The rise in gross margin was the most important factor in the company's quarterly report, Jain said.

"While the improvement is attributed to more targeted promotional spending, the higher gross margin offers further validation that management appears to be willing to sacrifice sales in the near-term for the sake of protecting earnings," Jain said.

Supervalu pinned the latest quarter's sales declines on the still weak economy and stiffer competitive pressures, which have produced mixed results for the nation's biggest grocers.

Kroger Co (KR.N), the best performing U.S. supermarket operator, in June reported better-than-expected quarterly profit. [ID:nN17152791]

Safeway Inc (SWY.N) last week cut its full-year outlook after weak consumer demand worsened the impact of its own effort to cut store prices. [ID:nN22153581]

THE WAL-MART EFFECT

Herkert joined the grocery chain from Wal-Mart Stores Inc (WMT.N) in May. He has been selling stores [ID:nN29258073] and lately has seen the world's biggest retailer turn up the heat with deeply discounted "rollback" special items ranging from ketchup to ice cream.

Walmart, which sells more groceries than any other U.S. retailer, recently got approval to build a second store in Chicago -- a key market for Supervalu's Jewel chain. [ID:nN30203636]

Supervalu said it now expects net earnings of $1.61 to $1.81 a share for the fiscal year, down from a previous range of $1.65 to $1.85, to reflect the impact of previously announced market exits and a labor dispute at Shaw's. It previously had expected the charges to total 10 cents a share for the year.

Excluding those one-time items, it still expects earnings in the range of $1.75 a share to $1.95 a share. Analysts have been expecting $1.73 a share before one-time items.

Supervalu now expects identical-store sales, excluding fuel, to fall about 5 percent for the year, versus its prior call for a decline of around 2 percent.

Identical-store sales at Supervalu include results from outlets operating for four full quarters, including store expansions and excluding fuel sales. (Reporting by Lisa Baertlein, additional reporting by Ben Klayman in Detroit, editing by Dave Zimmerman)