The reports of bleak quarterly results and the
company going up for sale were going around for some time, but the firing of SUPERVALU
INC.’s (NYSE:SVU) CEO Craig Herkert and chairman Wayne Sales being approached
to lead its re-launch is certainly astonishing.
Sales has promised to devise new strategies and
take decisions based in the best interests of The Eden Prairie, Minn.-based
operator of Albertson's, Jewel-Osco and other grocery chains. According to
Sales, time is the only factor standing in the company’s way.
Target Corp. and Wal-Mart Corp have given severe
competition to Supervalu and numerous supermarket chains in recent years. The
dollar stores and drugstores are no less, because they are offering extremely
low prices to snare customers. Even if Supervalu is compared among its peers,
it does not look to be in good shape. The organization suspended its dividend
and stated that they were reviewing its options with financial advisers, after
their profits and revenue experienced a sharp drop in the first quarter of the
year.
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Supervalu will reduce administrative costs by 250
million in the coming years and Herkert’s firing may be the first step in
restoring value to their tarnished marketing strategies. Interestingly, Herkert
was a Wal-Mart Stores Inc. executive, had tried the concept of positioning the
grocery chain as a neighborhood store, but the strategy failed miserably.
Sales is the retired vice chairman of Canadian
Tire Corp. and was its president and CEO from 2000 to 2006 and he has stated
that changes with be done as urgently as possible in their retail food business
in order to decrease prices and also create points of sustainable
differentiation for their customers.
Bankruptcy filing is not being considered as of
now. Sales will concentrate on their Save-A-Lot ventures, which have shown
decent profits. These stores are smaller and only private-label brands can be
purchased here. Philip Francis, who is a board member, was appointed as lead
director on Monday. Supervalu's shares rose 25 cents, or 12.6%, to close at
$2.24.
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