SuperValu (NYSE:SVU) shares lost 80% of their value in the last three years due to increasing market competition in the grocery stores industry. SVU revenues fell from $17 billion in 2013 to $12 billion in 2017, and its earnings also dropped at a double-digit rate in the last couple of years. Shares of Supervalu trade around $16 at present, down 32% in the last twelve months.
Source Image: finviz.com
Supervalu management started selling non-core businesses to cope with market volatility and to strengthen its balance sheet. Supervalu recently sold its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies for $3.3 billion. It also sold the Save-A-Lot business to Onex Corporation for $1.365B.
Asset sales allowed the company to manage its wholesales businesses effectively. In addition, the company also acquired small companies that are aligning with its future strategies. It acquired Associated Grocers of Florida for $180M and Unified Grocers for 375 million to expand its wholesale business.
Activists Want Asset Sale Despite Increasing Revenues
Supervalu asset management strategy seems to be working considering a robust revenue and sales growth. Its consolidated net sales grew 31% Y/Y in the latest quarter, supported by 52 percent year over year growth in the wholesale business segment.
The CEO said, “The work done in the third quarter concluded with this deal which, combined with the acquisition of Unified Grocers earlier this fiscal year, demonstrates our commitment to the strategic growth of our Wholesale business. Furthermore, we’re extremely pleased with the integration work at Unified and the progress made in that market.”
The company expects to sustain momentum in the final quarter of this year. However, reports suggest that the company is looking at all the options to sell its assets in the days to come, amid increasing pressure from activist investors. The activist investors called on the company to generate additional value for shareholder by selling its real estate assets and 30 percent of its stores.
Featured Image: Twitter
