UPDATED: Supervalu considers W. Newell & Co. changes - The Packer

UPDATED: Supervalu considers W. Newell & Co. changes

10/22/2009 12:45:00 PM
Ashley Bentley

(UPDATED COVERAGE, Oct. 23) W. Newell & Co., the fresh produce wholesale distribution company launched by Supervalu in 2005, is being realigned with one of the company’s regions, eliminating the role of W. Newell’s chief operating officer Gary Gionnette and possibly scrapping its standalone model.

Whether W. Newell will continue to operate as a subsidiary of Supervalu, keep its own sales and service staff and maintain its autonomy has not been determined.

“We’re still looking at organizational structures,” said Rebekah Fawcett, supply chain communications manager for Eden Prairie, Minn.-based Supervalu. “Are we going to scrap this model or are we going to build this model? It’s too early to say.”

By the end of the company’s fiscal year, in February, W. Newell should be completely aligned with Supervalu’s Midwest-Southeast region, which handles distribution centers from Wisconsin and Illinois down to Alabama, Georgia, Mississippi and Florida, similar to W. Newell’s primary distribution range.

“We just decided it made more sense to realign with our wholesale region,” Fawcett said.

Howard Davidowitz, chairman of New York-based national retail consulting and investment banking firm Davidowitz & Associates, said the move reflects Supervalu’s attempt to keep afloat, as its sales have shrunk the last 18 months.

Both the state of the economy and its 2006 acquisition of Albertson’s, which brought with it a big chunk of debt, have wreaked havoc on Supervalu’s financials.

“The company has problems on a major scale,” Davidowitz said. “Its earnings are in a state of collapse, and its focus is really on its discount division.”

The company announced Oct. 20, in its second-quarter earnings report the plan to build 1,200 more Save-A-Lot stores, the company’s discount banner, in the next five years. Also new in the move is the plan to build stores even in markets where existing Supervalu banners have homes, which the company refrained from before.

Supervalu also plans to mix and match its other banners more than it ever has, Craig Herkert, Supervalu’s president and chief executive officer, said at the earnings report.

Supervalu’s second quarter earnings fell from $128 billion the same time last year to $74 million, a 42% drop.  Its net sales were $9.5 billion, compared with $10.2 billion in the second quarter of fiscal 2009.

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