PORTLAND, Ore. (AP) — Supervalu Inc.'s turnaround efforts paid off in the first quarter as the grocery chain reported a 10 percent bump in net income and beat expectations, which sent its shares soaring Tuesday.
The company, which operates Albertsons, Jewel-Osco and other supermarkets, was an industry laggard for some time. But the turnaround plan launched more than a year ago — bringing in new management, cutting costs, lowering debt and closing stores — is beginning to bear fruit.
It also shifted to a heavier emphasis on better tailoring its stores to local needs and expanding its low-price Save-A-Lot chain to meet the demands of cost-conscious shoppers.
Supervalu said Tuesday that it earned $74 million, or 35 cents per share, for the quarter, up from $67 million, or 31 cents per share, last year. Excluding charges for closing stores and a labor dispute, the company earned 43 cents per share.
Revenue fell 4 percent to $11.11 billion.
Analysts expected the company would earn 33 cents per share on revenue of $11.13 billion. Shares jumped more than 9 percent by midday.
Supervalu leaders said the cost-cutting, new planning tools and a hyper-local focus on store operations, which were part of its strategy, were the key to its success for the quarter.
"There is no new news here," Supervalu CEO Craig Herkert said on a call with investors. "I want to be clear. There's nothing new we're doing or nothing short-term we're doing. Everything we're doing is what we said we are going to do to address our relevance with the consumer, and quite frankly, I feel good about how our team is executing against it."
The company did face struggles during the period. While the average amount spent in its stores was up, the number of shoppers fell compared with last year, when it relied heavily on big promotions that increased its traffic.
Supervalu said it also saw the impact of higher food prices, which it had to selectively pass along to shoppers without losing its low-price appeal.
Supervalu, based in Minneapolis, reiterated its guidance for 2012 net income of $1.20 to $1.40 per share; analysts expect $1.23 per share.
Shares of the company rose 59 cents to $9.11 Tuesday. The company's stock has traded between $7.06 and $12.45 in the past 52 weeks.
AP Retail Writer Michelle Chapman contributed to this report from New York.