* Closures include 27 Albertsons, 22 Save-A-Lot stores
* Majority of closures to be finished by Dec. 1
* Shares up almost 2 percent
LOS ANGELES, Sept 5 Supervalu Inc said
it would close about five dozen stores as it works to turn
around its grocery business, which lags Kroger Co and
Wal-Mart Stores Inc.
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 Dec. 1, the end of its fiscal third
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 Feb. 23, when its fiscal
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 Sept. 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.