Shares of SuperValu (SVU – Free Report) surged on Wednesday morning after the company posted quarterly revenue and earnings beats, but since then, its stock price has reversed course and plummeted over 11%.
One of the larger retail supermarket chains in the U.S. posted earnings of $0.46 per share, which beat our Zacks Consensus Estimate. On top of that, SuperValu’s revenues climbed 35% and also topped expectations.
Both of these positive signs helped the grocery giant’s shares soar over 7.3% premarket. Now the question is: what made investors so spooked that SuperValu stock then tanked to a new 52-week low?
One possibility is the fact that, when factoring in $43 million in after-tax charges and costs, SuperValu actually reported a $25 million net quarterly loss.
What’s more, the company’s same-store sales fell 3.5% during the quarter, while overall retail revenues dipped by 1.1%. And its overall sales were propped up by a 58% jump in SuperValu’s wholesale segment—which the company attributed mostly to sales from the company’s recent acquisition of Unified Grocers.
“We continue to make tremendous strides in driving our strategy, evidenced by another quarter of strong growth from our core Wholesale business which now represents over seventy percent of net sales,” said SuperValu President and CEO Mark Gross.
In a move to further bolster its wholesale division, SuperValu also announced on Wednesday that it entered into an agreement to acquire Associated Grocers of Florida for roughly $180 million.
SuperValu is in the midst of a business transition that will see the company focus more heavily on wholesale in the face of an uncertain retail and grocery environment. Yet its shares have already fallen by more than 42% since the start of the year.
It seems that many investors might have fled the aisles because SuperValu has tried to do too much too fast—with varying results. And even though shifting shopping habits have forced the entire retail industry to make changes, investors don’t seem too pleased with SuperValu’s new wholesale direction.
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