* New CEO to focus on lower prices, cutting costs, Save-A-Lot
* Shares rise 4 percent
By Phil Wahba
July 30 (Reuters) - Supervalu Inc ousted its chief executive on Monday as the grocery store chain tries to recover from falling sales and earnings and considers whether to sell the company.
Chairman Wayne Sales, 62, will replace Craig Herkert, a former Wal-Mart Stores Inc executive brought in three years ago to fix the No. 3 U.S. supermarket chain.
"After careful deliberation, the board decided that this change would be important to the company's efforts to improve our sales and earnings trajectory and generate long-term shareholder value," a Supervalu spokesman told Reuters.
On July 12, Supervalu reported that quarterly earnings per share slid almost 50 percent from a year earlier and sales fell 4.7 percent. It also said identical-stores sales dropped unexpectedly, the result of higher food costs that have hurt customers, many of whom rely on government assistance.
The company said at the time it was exploring options, including a sale of all or part of the company, a strategic review that Sales began overseeing as chairman.
In a statement, Sales, a former CEO of Canadian general merchandise retailer Canadian Tire Corp Ltd, said he will focus on taking "significant costs out of the business."
JPMorgan analyst Ken Goldman expects Sales to "pursue an even more aggressive price cutting effort" than his predecessor.
"Our goal is to be competitively priced, and we will move as quickly as possible to achieve this," Sales told associates in a letter on Monday.
Supervalu has suspended its dividend to fund the price cuts aimed at winning back shoppers.
Supervalu's Save-A-Lot chain, which competes head-on with Kroger Food-4-Less chain, has been its best performing business, while Albertsons has been its Achilles heel. Sales said bolstering the supermarket chain will be a priority.
Unlike Herkert, who worked at Albertsons before joining Wal-Mart in 2000, Sales has never led a food retailer. But in the note to staff, he emphasized his success at Canadian Tire, where he was CEO from 2000 to 2006, as that retailer faced growing competition. Like some Supervalu stores, Canadian Tire also sells gasoline.
Sales will continue to serve as Supervalu chairman. He has been a director since 2006 and non-executive chairman since 2010.
Herkert was Wal-Mart's president and CEO of the Americas between January 2004 and his appointment at Supervalu in 2009.
When Herkert took the helm, Supervalu was struggling under a mountain of debt from its $12.4 billion acquisition of more than 1,100 Albertsons stores in 2006 and the perception that prices at many of its stores were higher than those at competitors such as Wal-Mart and Kroger Co.
Those challenges continue to dog Supervalu.
The large size of the Albertsons deal forced Supervalu to devote a significant portion of its cash to servicing debt rather than investing in its stores.
During Herbert's tenure shares fell 88 percent.
Supervalu shares were up 4 percent at $2.07.