Supervalu Inc., the third-biggest U.S. supermarket chain, posted quarterly results below Wall Street estimates and lowered its forecast for the year, sending its shares down nearly 8 percent in premarket trading.
The company, which also operates Jewel-Osco and Albertsons stores, said in October that it was preparing new price cuts to win back customers lost to rivals like Kroger Co and Safeway Inc. The promotions did not work as expected, Chief Executive Officer Craig Herkert said.
“We invested heavily in promotional activities that proved to be less than effective,” he said in a statement. “Our performance is still not close to my expectations.”
The Minneapolis-based operator of Albertsons, Jewel-Osco and Save-A-Lot grocery stores sees 2011 earnings, excluding non-cash charges, of $1.25 to $1.35 per share compared with a prior forecast of $1.40 to $1.60 per share.
Many retailers from dollar stores and drug stores to Wal-Mart Stores Inc have been taking a bite out of supermarkets’ share of grocery spending.
In the past few years, high U.S. unemployment and a weak economy stoked price competition, which has cut industry profits and left little room for error.
Supervalu’s food sales fell 7.7 percent to $6.6 billion in the fiscal third quarter.
The company reported a quarterly loss of $202 million, or 95 cents per share, compared with a profit last year of $109 million, or 51 cents per share.
Excluding charges, the company reported earnings of $50 million, or 24 cents per share. On an adjusted basis, analysts were expecting 31 cents per share, according to Thomson Reuters I/B/E/S.
Shares in Supervalu fell 7.8 percent to $7.92 in premarket trading.
