SUPERVALU INC. (NYSE:SVU) Dumped On Revenue Miss, Company Rejig


Shares in Wholesaler and discount grocery retailer SUPERVALU INC. (NYSE:SVU) were pounded after it declared a revenue miss in its second quarter earnings report.

The stock fell 8.76% to close Wednesday at $4.58, on volume of 10.9 million shares.

The brief uptick in Supervalu after the deal to sell Save-A-Lot on October 17 also appears to have been neutralized by the sharp selling over the following two sessions.

SUPERVALU INC. (NYSE:SVU) jettisons Save-A-Lot

Supervalu agreed to sell its Save-A-Lot business to Canadian private equity firm Onex Corporation for $1.365 billion in cash, with the deal expected to close by January 31, 2017. As a part of the deal, Supervalu will provide certain services and assistance for the day-to-day operations over a period of five years.

“SUPERVALU is successfully executing on its long term strategic vision and positioning the Company for continued growth and value creation,” said Non-Executive Chairman of the Board, Jerry Storch. “We are confident that this transaction will create exciting opportunities for both SUPERVALU and Save-A-Lot.”

The sale proceeds will be used to prepay about $750 million of Supervalu’s outstanding term loans. Is Subsequent to the sale of Save-A-Lot, Supervalu will concentrate more on growing its wholesale business and retail businesses.

SUPERVALU INC. (NYSE:SVU) reports in-line earnings, revenue miss

For the 2017 fiscal second-quarter, Supervalu reported revenue of $3.87 billion, which declined 4.8% year over year, and missed analyst expectations of $3.95 billion. Adjusted earning per share was $0.10 per share, in line with Street expectations.

Most of the blame for the revenue miss was laid at the door of Save-A-Lot and retail, namely, increased levels of competitive openings, challenging sales and operating environment, impact of deflation and lower levels of SNAP benefits.

Technically, Supervalu weekly chart shows that the stock is locked inside a symmetrical triangle, with the 50 week moving average acting as a strong resistance.

This may be a base in formation, and the price could break out to the upside, but as is known with symmetrical triangles, there’s an equal chance that it could fall out and go lower, resuming its previous downtrend.


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