Reuters: Global Markets: Supervalu shares tumble after poor results

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Supervalu shares tumble after poor results Jul 12th 2012, 12:18 Thu Jul 12, 2012 8:18am EDT (Reuters) - Shares of Supervalu Inc (SVU.N) tumbled 27 percent on Thursday as several Wall Street firms cut their price targets on the stock after the supermarket chain's dismal quarterly results. Analysts also questioned Supervalu's ability to withstand competition from companies such as Kroger Co (KR.N) and Wal-Mart Stores Inc (WMT.N). Supervalu's shares traded at $3.85 before the market opened, down from Wednesday's New York Stock Exchange close of $5.29. After the stock market closed on Wednesday, Supervalu, the third-largest U.S. supermarket chain, said it had suspended its dividend to fund aggressive price cuts aimed at winning back shoppers. The company, which reported a sharply lower quarterly profit, also said it was looking at options that include selling itself. "Our belief that operations will improve has eroded meaningfully," JPMorgan analyst Ken Goldman wrote in a research note, citing the aggressiveness of Supervalu's rivals. Supervalu said on Wednesday that it would redouble efforts to get its everyday pricing as low as competitors. "Competition is growing more intense, and we believe that it will likely take time for new price investments to gain traction," Citi Research analyst Deborah Weinswig wrote in a note. She lowered her price target on Supervalu shares to $4 from $7. Others lowering their price targets on the stock included analysts from BMO, Cantor and Guggenheim. Guggenheim Securities analyst John Heinbockel said in a note that Supervalu could still be facing declining comparable-store sales and earnings before interest and taxes in two or three years. "It is very difficult to fundamentally alter one's price perception in any reasonable time period," Heinbockel said, adding that the prospects of success for Supervalu's approach are dim. (Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn) Link this Share this Digg this Email Reprints

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