UPDATED: Supervalu considers W. Newell & Co. changes

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

The company plans to sink $75 million annually into the Save-A-Lot expansion, which will double the existing amount of 1,200 stores. Its board of directors voted Oct. 19 to reduce the regular quarterly dividend to $0.0875 per share from $0.175 per share to come up with the money.

“Supervalu is totally focused on the trade down, and they should be,” Davidowitz said. “It’s Aldi time, and Wal-Mart continues to gain market share. Today we’re talking about how cheap you can get.”

Although the company’s stock went up 27-cents after the report, Wall Street is still wary of Supervalu, according to media reports. Standard & Poor’s Equity Research changed its ranking to “sell” on the company.

“Supervalu has always been a great distribution company,” Davidowitz said. “They’re the largest food wholesaler in the U.S., and when it comes to food distribution, Supervalu is a pioneer and does it better than anybody. But they have never been a very good retailer.”

“I think, frankly, their future is in question,” Davidowitz said.

The changes to W. Newell likely reflect Supervalu’s changed focus in the current economy and in its current financial situation, he said.

The Midwest-Southeast region, which W. Newell is set to join, is one of three wholesale regions that supplies Supervalu’s banner stores — including Cub, Jewel-Osco, Albertson’s and Shop ‘n Save — as well as independent retailers. Fawcett said the Pleasant Prairie, Wis.-based region is geographically aligned with W. Newell, which has headquarters in Champaign, Ill., and shares many of the same customers.

Supervalu is still working on the best way to structure W. Newell moving forward, and has not named a top executive for the restructured company. In the interim, Bob Cisler, vice president of merchandising for the Midwest-Southeast region, is overseeing the transition, although he is not necessarily overseeing W. Newell, Fawcett said.

Besides Gionnette, John Aune who also had joined W. Newell when it opened as vice president of national operations, lost his job in the restructure, and he left the company this summer, Fawcett said.

Aune held several positions in his career with Supervalu, including vice president of category management, as well as other management positions, according to media reports.

Supervalu is still evaluating the benefits of W. Newell and what could possibly be grown.



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