UPDATE 2-Supervalu warns on weaker quarterly results

* Supervalu warns Q1 profit will be far below Street view

* Cites tighter spending by consumers

* Supervalu stock down almost 12 pct; Safeway, Kroger fall (Adds CEO comments, details, background)

CHICAGO, June 24 (Reuters) - Supervalu Inc (SVU.N) warned on Wednesday that quarterly profit will be substantially below analysts' expectations as consumers tighten spending in the recession, sending the supermarket operator's shares nearly 12 percent.

The operator of about 2,500 Albertsons, Jewel-Osco, Shaw's and Save-A-Lot stores also cited a tougher-than-expected business environment that included price cuts and higher levels of promotional spending to try to lure consumers.

Analysts polled by Reuters Estimates were expecting a profit of 65 cents a share for the first quarter ended on June 20.

"Consumers have become more value-focused and cautious in their spending, which has pressured sales and margins greater than anticipated," Chief Executive Craig Herkert said in a statement.

Herkert was named CEO in May, joining the Minneapolis-based company from Wal-Mart Stores Inc (WMT.N), where he was CEO of the Americas region. He said on Wednesday that he was engaged in a full review of Supervalu's operations.

Faced with competition from lower-priced retailers like Wal-Mart, grocers like Supervalu and Safeway Inc (SWY.N) have resorted to price cuts and promotions.

In some markets, Supervalu has cut prices up to 20 percent on thousands of staple products. [ID:nN12326481].

Supervalu said it expected identical-store sales in the first quarter to be down about 3 percent.

The profit warning "will place an overhang on the entire sector as investors begin to speculate on how Supervalu will reinvigorate sales and stem the decline," Pali Capital analyst Robert Summers said. "Competition could dramatically escalate over the near-term, particularly given the weak overall consumer environment."

On Tuesday, Kroger Co (KR.N), the No. 1 supermarket chain, posted a higher-than-expected quarterly profit, but did not raise its full-year forecast.

Supervalu said it would update its annual outlook on July 28, when it plans to report first-quarter results. Analysts expect a full-year profit of $2.50 a share.

Shares of Supervalu slid 11.9 percent to $13.83 in early trading, while Safeway was off 2.1 percent, and Kroger fell 1.8 percent. (Reporting by Ben Klayman and Lisa Baertlein, editing by Gerald E. McCormick and Lisa Von Ahn)