UPDATE 2-Slimmed-down Supervalu's profit nearly doubles

Thu Jan 9, 2014 11:15am EST

Jan 9 (Reuters) - Supervalu Inc's quarterly net profit nearly doubled as the supermarket operator benefited from cost savings after selling hundreds of underperforming grocery stores last year.

Executives said on Thursday that the company's supermarket business had stabilized after a major restructuring, but a cut in federal food stamp benefits that started in November weakened sales at the Save-A-Lot discount warehouse stores by slightly less than 1 percent during the quarter.

Shoppers appeared to offset the lost benefits with cash purchases, executives said.

The company, whose supermarket chains include Cub, Farm Fresh and Shop 'N Save, said net income rose to $31 million, or 12 cents per share, in the third quarter ended Nov. 30 from $16 million, or 8 cents per share, a year earlier.

Excluding a charge for a multi-employer pension plan withdrawal and other special items, earnings met analysts' expectations of 13 cents per share.

Gross margins expanded to 14.2 percent from 13.1 percent.

Revenue fell marginally to $4.01 billion, missing the analysts' average forecast of $4.05 billion, according to Thomson Reuters I/B/E/S.

Supervalu, like larger rival Safeway Inc, has been battling market share losses to rivals such as Kroger Co and Wal-Mart Stores Inc and has abandoned some hotly competitive regional markets to cut costs.

Sales at Supervalu's biggest wholesale grocery distribution business fell 3.7 percent to $1.91 billion due to the loss of two large clients and a drop in military orders due to the U.S. government shutdown.

Sales at Save-A-Lot stores rose 2.6 percent, however. Sales at identical stores - those operating for four full quarters and including expansions but not fuel sales - increased 1.7 percent.

At the company's other supermarket chains, sales fell 2.6 percent to $1.06 billion, hurt by a 1.9 percent drop in identical-store sales.

Shares of Minneapolis-based Supervalu were down 1 cent at $7.02 in morning trading on Thursday. The stock has more than doubled in value since the company announced the sale of 900 stores, including its Albertsons chain, about a year ago.

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