Supervalu Fires CEO Craig Herkert, Hands Job to Chairman

Craig Herkert
MINNEAPOLIS - Supervalu is ousting CEO Craig Herkert as the grocery chain looks to right its business only weeks after reporting disappointing quarterly results and suggesting it might put itself up for sale.

Chairman Wayne Sales was named Monday to take on the additional roles of president and CEO.

Supervalu (SVU) had brought in Herkert, a former Walmart (WMT) executive, in 2009 to help shake things up. The grocer subsequently put a heavier emphasis on lower prices and tried to position itself as a neighborhood store to draw new shoppers and keep customers.

Earlier this month, the Minneapolis company reported that both its first-quarter net income and revenue slid and it suspended its dividend.

Supervalu was still feeling the pressure from competitors and the company announced that it would cut prices further. The grocer also said earlier this month that it planned to trim its administrative and operational expenses over the next two years and cut its capital spending.

The company had said it and and its financial advisers will review various options. While the supermarket operator did not elaborate, this type of review traditionally includes the possibility of selling the company.

Sales, 62, has been a board member since 2006. He is the retired vice chairman of Canadian Tire Corp. and was its president and CEO from 2000 to 2006. Sales previously served in various roles at Kmart's U.S. division.

The cost savings efforts, coupled with a focus on improving its financials and becoming more competitive, appear to be tops on Sales' agenda.

"We will take significant cost out of the business, and move with urgency in our retail food business to lower prices and create points of sustainable differentiation for our customers," Sales said in a statement.

He added that Supervalu is still reviewing its strategic options and that he will continue to lead that process.

Supervalu also named board member Philip Francis, 65, as lead director on Monday.

Sales plans to retire from his board posts at Georgia Gulf Corp. and aviation company Discovery Air so that he can concentrate on his roles at Supervalu.

Supervalu's shares fell 3 cents to $1.96 in morning trading.

The company has about 4,400 stores in the U.S.

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Craig E. is being thanked by his former employer Wally World for taking out 2 of the top 5 chains competing
against Wally World (SVU & Albertsons). I have never seen a CEO destroy a company so fast. JCP new CEO is giving it a try though. The last time SVU brought in a bunch "guys" from Kmart they almost busted the company.

Locations and Customer Service s/b their top 2 priorities after they sell 40-49% of Save a Lot in an IPO. All the dollar stores P/E's are near 20 except for FDO which is lower. and unloved by many (I like FDO). They can use the cash to pay down debt. and have some left in the bank for emergencies.

Creating excitment in the stores with a focus on customer service (Kohls is good) will turn this chain around. Minimize Cap EX and watch other costs will help short term. If they start NOW at full speed they can capture sales by the all important winter holidays.

August 01 2012 at 12:12 PM Report abuse rate up rate down Reply

Didn't this company report in ad age that they were building their Internet/Social Media Advertising techniques? Maybe when they took their money out of advertising on TV, Couponing, Print, and Direct Mail and put it into things like Facebook, their revenue dropped. People still like coupons in the paper and mail. That's what I think happened but it has been happening to a lot of companies. Social media is way over-rated and TV and Print are still very effective.

August 01 2012 at 11:02 AM Report abuse rate up rate down Reply

The big mistake in Calif Albertsons did was to not support the Lucky Stores banner after buying Parent American Stores, Albertsons tried to "Marry" the two banners under Albertsons. When they did that they did the other two Calif chains a favor since in my opinion Lucky was the stronger banner and had a better price structure for competition. Albertsons handed Vons and Ralphs their former Lucky customers and now treat the banner like an ugly step child and will not sell the banner cause they know what would happen. They lost their Lucky brands to I believe it was Grocery Outlet, the term "Keybuy" house brands Lady Lee and Harvest Day.
They would say they tried to bring it back but it failed, It failed because customers see Albertson brand items in a Lucky store which sends a message of being not commited to the chain and their are the customers.
In my opinion SuperValu needs to give Lucky and Abertsons their own identity from their roots and return Lucky back to Calif and Also have all three Calif banners on their trailers. not just Albertson,Savon they need to add Lucky Stores to the truck trailer. I go on and on what should be done but I won't.

July 31 2012 at 11:20 AM Report abuse rate up rate down Reply

Herkert only made $1.29M

July 31 2012 at 6:40 AM Report abuse rate up rate down Reply

time to write this company's obit.

July 31 2012 at 2:17 AM Report abuse rate up rate down Reply

ALL grocery stores are basically the same. Basically the same items. What they need to do is clean up the stores and actually put service back into the stores. How nice would it be to have someone bag your groceries and take them to the car for you? How nice would it be to actually have someone to talk to about meat, deli, produce, bakery, etc in the store? Night stocking has ruined the grocery business. It has taken people off the aisles that could help people. Bring the stockers in at 3 or 4 am, have them work until noon. Have them available for front end service after the store opens. Have part time stockers finish up their work after noon. Running a grocery store isn't rocket science. The REAL problem is stock holders who think their stock value should go up and so should their dividends. Grocery stores have lower profits than a WalMart or Target because of the item mix. It all boils down to service in the stores. Plus Supervalu needs to get all of their store under one name. This guy Sales came from KMart and we all know what has happened to KMart. Actually bring in someone that KNOWS the grocery business and knows what to do. Cutting prices is not the answer.

July 30 2012 at 3:29 PM Report abuse +1 rate up rate down Reply
1 reply to victorzeller's comment

Supermarkets need to get away from the high prices and try to compete with Walmart and The Target Greatlands and Targets that carry Groceries.They claim they dont make any money,But,they charge much higher prices on some of the staple items.They also need to get back to service,organizing their stores so things are easier to find,Not cluttering their aisles with sidestacks and better meat and bakery,and deli counters.Ralphs has got to be the most expensive deli counters and when they ask you to do a survey they need to listen to their customers.I bought Roast beef from their deli and was $9.99 a pound vs $5.99 a pound at Stater Bros.They need to go with full Service meat counters with fresh meats.Albertsons,Ralphs,And Vons all suffer with no selection in their Meat Department.A good example of a market is Raleys in Northern California

July 31 2012 at 1:41 AM Report abuse rate up rate down Reply

I see Supervalu is bringing in another executive from another dynamic U. S. retailer.

July 30 2012 at 1:31 PM Report abuse rate up rate down Reply
Sherry Mooney

It's about time! What took so long?

July 30 2012 at 12:46 PM Report abuse -1 rate up rate down Reply
Sherry Mooney

It's about time!

July 30 2012 at 12:45 PM Report abuse -1 rate up rate down Reply

Time to get supervalu back on track. Many of their stores i.e. Cub Foods etc. have their prices way way to high and are NOT competitive with other local stores ---- that is WHY shoppers are shying away from them and they seem to be way too blind to see it !! Their Albertson stores in Nevada are overpriced and seemingly do not compete with "Smiths Markets" --- Good to see a change as obviously the ousted CEO did not know what he was doing!!!! They (in the board room) need to wake up and find ways to compete and fast !!! Buy locally and smarter etc. etc. Change a few regional managers ??? Some changes need to be made and rapidly.

July 30 2012 at 12:25 PM Report abuse +1 rate up rate down Reply