Supervalu shares tumble 44 percent after poor results

MINNEAPOLIS, Thu Jul 12, 2012 – Shares of Supervalu Inc. tumbled 44 percent on Thursday as several Wall Street firms cut their price targets on the supermarket chain after it reported declining sales and profit.
Analysts also questioned Supervalu’s ability to withstand a price war with rival companies such as Kroger Co. and Wal-Mart Stores Inc.
Supervalu shares were down 44 percent at $2.96 in morning trading.
After the stock market closed on Wednesday, Supervalu, the third-largest U.S. supermarket operator, said it had suspended its dividend to fund aggressive price cuts aimed at winning back shoppers.
“SVU (Supervalu)’s future is highly uncertain given the magnitude and speed of the deterioration,” said BMO Capital Markets analyst Karen Short.
The company, which reported a sharply lower quarterly profit, said it was mulling including a sale. Supervalu owns grocery chains such as Jewel-Osco and Save-A-Lot.
“Our belief that operations will improve has eroded meaningfully,” JPMorgan analyst Ken Goldman wrote in a research note, citing the aggressiveness of Supervalu’s rivals.
He said Supervalu’s pricing plans boded ill for other food retailers.