Supervalu to close about 60 stores
LOS ANGELES (Reuters) - Supervalu Inc (SVU.N) said it would close about five dozen stores as it works to turn around its grocery business, which lags Kroger Co (KR.N) and Wal-Mart Stores Inc (WMT.N).
Supervalu, which has suspended its dividend, put itself up for sale, and made a number of management changes, said on Wednesday that it would close most of the "underperforming or non-strategic stores" before December 1, the end of its fiscal third quarter.
The closures will include 27 Albertsons supermarkets in Southern California and the Intermountain West region, 22 Save-A-Lot discount food stores, four Acme supermarkets and one Jewel-Osco grocery stores.
Supervalu, the third-largest U.S. supermarket operator, said eight other stores would be closed, but it declined to give details, citing ongoing contractual discussions. Supervalu expects those stores to be closed by February 23, when its fiscal year ends.
Chief Executive Wayne Sales said the company was taking these actions "to move with a greater sense of urgency to reduce costs and improve shareholder value."
Sales, the company's chairman, replaced the previous CEO Craig Herkert, who was ousted in late July.
Supervalu said it expects to record a pre-tax charge of $80 million to $90 million in fiscal 2013 related to the closures, with all but $3 million in estimated severance costs being non-cash. It also expects a pre-tax gain of about $10 million from the sale of departmental assets in the second quarter ending September 8.
Over the next three years, the company estimates that closing the stores will generate between $80 million and $90 million in cash through real estate transactions, eliminating cash operating losses and selling departmental assets. Cash generated from those activities will be used to reduce debt and general corporate purposes.
Supervalu shares rose to $2.32 in extended trading after the announcement after closing at $2.28.