Grocery giant Supervalu is exploring a sale of all or parts of the company following on the heels of a quarter where same-store sales fell 3.7 percent and earnings declined 45 percent.
The company, which hired Goldman Sachs and Greenhill & Co. to pursue a sale, also announced it would suspend its dividend and that it is planning an additional $275 million in operational cuts to the $75 million previously announced.
"From administration to retail stores to distribution centers, we are identifying opportunities to become leaner and more efficient," Craig Herkert, chief executive officer and president of Supervalu, told analysts, according to the Star Tribune.
While Albertsons is generally acknowledged to be the weakest link in the Supervalu chain, the company's sales problems extend way beyond that. Even Save-A-Lot, the limited assortment concept that Mr. Herkert had pegged for aggressive growth, saw its same-store numbers slip 3.4 percent in the last quarter.
Mr. Herkert sees lower prices as the means for Supervalu to better compete across the board.
"It is essential that we move even more aggressively to lower prices, and anticipate and respond to competitor actions. We expect our business transformation to meet our customers' demands for great quality at lower prices," he said in a statement.
While Supervalu's shares are relatively cheap, dropping to $3.90 in after-hours trading, a sale may prove difficult.
"Nobody views it as a viable buyout candidate anymore," Bob Summers, a grocery analyst with Susquehanna Financial Group, told Reuters. "Why pay for them when you're going to get the market share for free?"
Mr. Herkert, who continues to remind the investment community that Supervalu is profitable, said, "With our first fiscal quarter results falling well below our expectations, we must wage a more forceful response to the competitive challenges we face. We believe that the steps we are taking are prudent and will be beneficial to all of our constituents."