Cerberus to invest in Supervalu, install new leadership

Only a couple weeks after a group led by Cerberus Capital Management agreed to buy five Supervalu grocery chains for $3.3 billion, an investment group led by Cerberus is scheduled to take control of 20-30% of Supervalu and install a new executive leadership group.

According to Neil Stern, a senior partner at McMillanDoolittle, it's a good deal for Supervalu "because it makes it a more viable company in the long run (by turning) the clock back to where it was in 2006, before the Albertsons acquisition, and it will now be clearer how the company is performing."

Once the deal is done, Supervalu will continue to:

• Operate as a wholesale distributor;
• Own or license the Save-A-Lot chain;
• Own the 184 stores operating as Cub Foods, Shoppers Food & Pharmacy, Farm Fresh, Shop 'n Save and Hornbacher's.

In addition, Sam Duncan will become Supervalu's president and chief executive officer. He has previously served in similar capacities at OfficeMax, ShopKo Stores, Fred Meyer and Ralphs Grocery Co.

According to analysts, Supervalu will have to develop a new organizational structure, cut costs, turn Save-A-Lot around and devise a long-term financial plan for the company.

Many believe the company's success will be driven by Save-A-Lot, as traditional grocery stores have more limited growth prospects.

Related story: Supervalu sells Acme and four other brands; Kimco in on the deal

Supervalu reports quarterly loss of $750 million

Supervalu reported a net loss of $750 million - or $3.54 per share - for the quarter ended December 3, 2011. The loss for the same quarter one year ago was $202 million. Sales for the quarter ended December 3 were $8.3 billion, compared to $8.7 billion for the comparable quarter one year ago.

Supervalu brands include Acme, Save-A-Lot, Albertson's, Cub Foods, Farm Fresh, Jewel-Osco, Shaw's/Star Market, Shop 'N Save and Shoppers.

Wakefern member says profit margins are one percent

Village Super Market Vice Chairman Bill Sumas told The Baltimore Sun recently that his stores, which are part of the Wakefern cooperative, operate on a one percent margin. At the same time, he credited his family's involvement in the company as well as the economies of scale Wakefern offers as the reason they keep "moving in the right direction."

Margins in the supermarket business are generally known to be in the one-and-a-half to two percent range, with stores like Whole Foods operating at close to a three percent margin.

The Sumas family has run supermarkets in New Jersey and Pennsylvania since 1937 and recently opened two ShopRite stores in Maryland. Both locations were Superfresh stores that closed earlier in the year. According to Sumas, his company wanted a third Superfresh site, but it went to Shoppers Food and Pharmacy.

Superfresh to close 13 Baltimore area stores, 12 others bought in auction

According to a press release issued by A&P, 12 of the 25 Baltimore-area Superfresh stores put up for sale at auction have sold, and 13 will be shut down in July because the company could not find anyone to buy the properties.

Mrs. Green's Management Corp. and Village Supermarkets have agreed to buy 10 of the stores in a joint venture. Two of the stores will be operated by Village Supermarkets, with the remaining stores to be operated by Mrs. Greens. Other sources have reported that the two stores to be operated by Village Supermarkets, a member of the Wakefern cooperative, will be branded as ShopRite. (Additional sources have incorrectly identified ShopRite as the buyer of the 10 stores.)

Winning bidders for the other two stores to be sold were Supervalu (Shoppers Food & Pharmacy) and Englar Center Limited Partnership, which is the landlord for the store it plans to purchase.

All sales and store closures require the approval of a bankruptcy court.