SuperValu may spin off Save-A-Lot into separate company

AP News
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Posted: Jul 28, 2015 3:40 PM

NEW YORK (AP) — SuperValu said Tuesday that it may spin off its discount grocer Save-A-Lot into a separate publicly traded company as competition in the industry intensifies.

Shares of SuperValu Inc. jumped more than 10 percent in late trading Tuesday.

The company said the split will help each company focus on finding ways to grow. SuperValu Inc. has been getting smaller in recent years, selling its Albertsons, Jewel-Osco and other chains.

Rival chains have been combining. Last month, the owner of Stop & Shop and Giant stores said it will merge with the parent company of Food Lion to operate 6,500 stores around the world. And discounter Dollar Tree completed its deal to buy Family Dollar earlier this month, bringing its store count to about 13,000.

Save-A-Lot has more than 1,300 stores around the country, selling fresh meat, vegetables and other groceries. The company has plans to open 100 new Save-A-Lot stores by early next year, some in new markets. It will open its first Las Vegas store later this summer. SuperValu said it doesn't have a timeline for when the Save-A-Lot separation may happen.

"Save-A-Lot is a business with great growth prospects," said SuperValu CEO Sam Duncan in a conference call Tuesday, adding that the new stores will help it compete with other discount retailers.

Based in Eden Prairie, Minnesota, SuperValu distributes grocery items to nearly 3,600 stores and also operates the Cub Foods, Shop 'N Save and Hornbacher's chains.

SuperValu shares rose 75 cents, or 10.2 percent, to $8.11 in afternoon trading Tuesday. Its shares are down more than 13 percent in the last 12 months.