Save-A-Lot, America’s leading hard-discount, carefully selected assortment grocery chains and a wholly-owned subsidiary of SUPERVALU Inc. (SVU) announced the opening of its full-service grocery store in Atlantic City on May 17, 2012.
Save-A-Lot already operates 10 other stores in New Jersey, and the opening of the Atlantic City is the 11th in this region. The company has given employment to 240 workers in the region.
Save-A-Lot stores, which offer goods at prices typically 40% less than other traditional grocery stores, started operations with a single store in 1977. It was acquired by Supervalu in 1992.
Save-A-Lot Food Stores operates through 1,300 stores in 39 states. The company is expanding aggressively in all parts of the US. In February and March 2012, Save-A-Lot opened three new stores in Tennessee, four in Pennsylvania, and three each in Ohio and New York.
We are pleased with SUPERVALU’s efforts to drive its retail operations primarily through new store development, addition of merchandise in existing stores and increasing the number of replacement food distribution centers. Supervalu plans to complete 55 to 75 store remodels in fiscal 2012. The retailer expects to open 160 ‘Save-A-Lot’ stores by fiscal 2012.
During fiscal 2012, the company added 83 new stores and remodeled 83 traditional store. It also upgraded its technology to drive productivity and added a number of customer-facing merchandising initiatives to help drive sales. The company expects to complete approximately 100 store remodels and add approximately 50 Save-A-Lot stores in fiscal 2013. The company plans to add 250 Save-A-Lot stores in the next five years.
However, identical store sales were negative in the fourth quarter of 2012 for the fourth successive year, resulting in loss of market share, which in turn, has weakened the competitive climate. Moreover, high inflation and stiff competition from Safeway Inc. (SWY) and Wal-Mart Stores Inc. (WMT) are matters of concern.
Currently, we have a long-term Neutral recommendation on SUPERVALU, which carries a Zacks #3 Rank (short term Hold rating).
SUPERVALU INC (SVU): Free Stock Analysis Report
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WAL-MART STORES (WMT): Free Stock Analysis Report
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