J.P. Morgan: SUPERVALU Reports Solid Q4

In a research report released this morning by J.P. Morgan, SUPERVALU

beat Street estimates in its 4Q report. According to J.P. Morgan, “Supervalu beats by $0.03. The top line came in lighter than the Street expected (-5.0% versus -4.0% Y/Y); however, we think ID sales of -1.9% were better than most observers anticipated. It is possible that some models were not properly accounting for the impact of closed fuel centers. The gross margin came in softer than we expected (22.8% versus 23.2%), offset by a lower SG&A margin than we anticipated (19.9% versus 20.4%). Normally we might wonder whether the lighter SG&A figure indicated a lower quality quarter; however, given recent headcount reductions, the SG&A decline may be somewhat sustainable. The tax rate contributed $0.02 to the beat, by our measure.” J.P. Morgan maintains its Overweight rating on SVU, which closed yesterday at $5.32.