Midday Commentary: SuperValu bonds, shares move up after earnings, update on sale process

By Paul Deckelman

New York, Oct. 18 - SuperValu Inc.'s bonds were firmer on Thursday morning after the Eden Prairie, Minn.-based supermarket operator reported quarterly results and provided an update on its efforts to find potential investors in or buyers of the company or its component parts.

SuperValu's 8% notes due 2016 pushed up by 2 points, to 86¼ bid, on round-lot volume of over $12 million, making it one of the most active Junkbondland names of the morning.

The company's New York Stock Exchange-traded shares jumped by 17 cents, or 8.09%, to $2.21 at 10:45 a.m. ET on volume of 4.8 million shares, just a little below its average volume for a full trading day.

The financial results were, at best, underwhelming. The company said revenues for the fiscal second quarter ended Sept. 8 fell to $8.04 billion - a little better than the roughly $8 billion figure Wall Street was expecting, but down from $8.43 billion a year ago.

And SuperValu slid into the red, posting a net loss of $111 million, or 52 cents per share, versus a year-ago profit of $60 million, or 28 cents a share. Excluding one-time charges related to store closings and asset writedowns, earnings per share were around the zero mark, down from analyst expectations of around 12 to 13 cents per share.

However, the company - which operates the big Albertsons, Jewel-Osco and Save-A-Lot supermarket chains, among other banners, reported that its previously announced review of strategic alternatives is proceeding and added that it is in talks with several parties, which it did not identify.

For the overall market Thursday morning, the KDP High Yield Daily index stood at 74.69, unchanged from Wednesday's close, while its yield held steady at 5.96%.

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