Private Label Buyer

Supervalu CEO: Private Label Program At Heart Of Recovery

October 24, 2012

New Supervalu CEO Wayne Sales talked with analysts on a conference call last week after announcing second quarter earnings results and said that the company needed to return its focus to platforms that encouraged competitive pricing and taking costs out of the business – namely, its private label program.

Answering a question about fixing problems with the company, Sales said most of his executive team’s team is focusing on the retail business.

“And I believe it can be fixed with the right amount of balance in terms of doing those things that make us competitive, like competitive pricing, taking costs out of the business, and then articulating points of differentiation. When we think about leveraging the strong foundation we have in areas such as Everyday Essential and our private label program, as we look at potential segmentation of our stores. So we will focus on execution in each one of our banners,” Sales told analysts, according to transcripts from Seeking Alpha.

Among those banners is Save-A-Lot, an area where Sales focused on for much of the earnings presentation. He said part of the attention the company has paid to Save-A-Lot in the past year has been getting back to basics – which means finding a better mix of private label products in those stores.

“I believe that we had … gone too much in terms of a national branded product and deleverage or deweighted, if you will, our private brand product, which provides the ultimate in terms of value proposition for our customers and allowing us to be extremely competitively priced there,” Sales told analysts. “When you look at some of the cost structure, the inefficiencies that was in the system, the lack of clarity and definition of roles, the lack of appropriate and balanced marketing there, the communications that we evolved to in terms of the consumer communications … I think had gotten off strategy. Having said that, the time that Santiago (Roces, CEO of Save-A-Lot) has been there, he’s done a great job of articulating what we need to do to get back on strategy.”

Supervalu reported same-store sales fell 4.3 percent in the fiscal second quarter, with earnings flat from a year ago.