SUPERVALU Reports Record Second Quarter Fiscal 2008 Earnings

SUPERVALU INC. (NYSE:SVU) today reported record earnings for the second quarter of fiscal 2008. The company reported second quarter net sales of $10.2 billion compared to $10.7 billion last year, record net earnings of $148 million compared to $132 million last year, an increase of 12 percent and record diluted earnings per share of $0.69 compared to $0.61 last year, an increase of 13 percent. Second quarter fiscal 2008 and fiscal 2007 results include charges for one-time acquisition related costs of $19 million and $16 million or $0.05 and $0.04 per diluted share, respectively. SUPERVALU’s second quarter of fiscal 2008 ended September 8, 2007 and included 12 weeks of combined results compared to the second quarter of fiscal 2007 which included 13 weeks of acquired operations. The estimated sales impact of one less week of acquired operations in the second quarter of fiscal 2008 is approximately $450 million or approximately $0.03 per diluted share. When adjusting for the one extra week in the prior year quarter, diluted earnings per share increased 19 percent. On June 2, 2006, SUPERVALU completed its $11.4 billion acquisition of Albertson’s premier retail properties, which transformed SUPERVALU into the nation’s third-largest supermarket chain with leading market shares across the country. Jeff Noddle, SUPERVALU chairman and chief executive officer said, "Through the first half of fiscal 2008, we are on track, delivering the fifth consecutive quarter of double-digit earnings per share growth on the heels of our record-setting results during fiscal 2007. In year two of our three-year journey, we are implementing programs to improve our long-term sales performance and deliver our synergies, while operating our business from day-to-day. I am pleased to affirm our fiscal 2008 earnings guidance today, which represents another year of double-digit earnings per share growth.” Segment Results Retail Food Segment - Second quarter retail net sales were $8.0 billion, compared to $8.5 billion last year. The sales decrease reflects one less week of acquired operations, which is estimated at approximately $450 million. Identical store sales growth, excluding fuel, for SUPERVALU in the quarter was 0.5 percent. In addition, sales increases from new stores and positive identical store sales were more than offset by the previously disclosed closure of underperforming stores, primarily in the acquired operations. As of September 8, 2007, SUPERVALU’s retail store network of 2,463 stores included approximately 877 combination stores, 403 food stores, and 1,183 limited assortment food stores. Included in this total are 858 licensed limited assortment food stores. Total owned retail square footage at the end of the second quarter of fiscal 2008 was approximately 71 million square feet. Total retail square footage decreased 3.5% from the second quarter of fiscal 2007. When excluding store closures, total retail square footage increased 2.4% over the second quarter of fiscal 2007. Reported retail operating earnings for the second quarter was $385 million compared to $361 million last year, an increase of 6.7 percent. When adjusting for the one extra week in the prior year quarter, retail operating earnings increased 13 percent. Reported retail operating earnings as a percent of sales were 4.8 percent compared to 4.2 percent last year. The net increase in retail operating earnings as a percent to sales is from lower employee-related costs, lower depreciation expense from the recently completed purchase accounting valuations, and the benefits of merchandising programs. These were offset in part by store closure costs. Supply Chain Services Segment - Second quarter net sales for supply chain services were $2.2 billion, up approximately 1.8 percent from last year. The sales increase primarily reflects new business growth, which was partially offset by normal customer attrition. Reported supply chain services operating earnings for the second quarter were $63 million compared to $56 million in last year's second quarter, an increase of 12 percent. Reported supply chain services operating earnings as a percent of sales were 2.9 percent compared to 2.6 percent in last year's second quarter. The increase in supply chain services operating earnings as a percent of sales primarily reflects lower employee-related costs and operational efficiencies. Other Items General corporate expense for the second quarter was $42 million compared to $26 million last year. The increase from last year reflects one-time acquisition related costs of approximately $19 million and higher litigation charges. Last year’s corporate expense includes one-time acquisition related costs of approximately $16 million. Net interest expense for the second quarter was $163 million compared to $176 million last year reflecting one less week of the acquired operations, lower debt levels and the benefit of lower borrowing rates in the quarter. SUPERVALU’s effective tax rate for the second quarter was 39.0 percent in contrast to last year’s 38.6 percent, reflecting the estimated effective tax rate for fiscal 2008. Capital spending year to date was $511 million, including approximately $22 million in capital leases. Thirty-five major remodels and 18 minor remodels have been completed year to date. Capital spending primarily includes retail store expansion, store remodeling and supply chain initiatives. Total debt to capital was 61 percent at the end of the second quarter compared to 62 percent at the end of the first quarter and 64 percent at fiscal 2007 year-end. The total debt to capital ratio is calculated as total debt, which includes notes payable, current debt and obligations under capital leases, long-term debt and obligations under capital leases, divided by the sum of total debt and total stockholders' equity. Diluted weighted average shares outstanding for the second quarter were 216 million shares compared to 220 million shares last year. The decrease in weighted average diluted shares is primarily due to the company’s repurchase of convertible debentures in the third quarter of fiscal 2007. As of September 8, 2007, SUPERVALU had 211 million shares outstanding. For the first half of fiscal 2008, the company reported net sales of $23.5 billion compared to $16.4 billion last year, net earnings of $296 million compared to $219 million last year, and diluted earnings per share of $1.37 compared to $1.21 last year. Results for the first half of fiscal 2008 include charges for one-time acquisition related costs of $0.13 per diluted share compared to $0.10 of one-time acquisition related costs last year. The company affirmed fiscal 2008 guidance.   Diluted Earnings Per Share Summary   Guidance     Fiscal 2008 Reported diluted earnings per share $2.73 to $2.83 One-time acquisition related costs   $0.20 Diluted earnings per share before one-time costs $2.93 to $3.03 Weighted average diluted shares outstanding (millions) 216 to 218 SUPERVALU’s fiscal 2008 outlook includes business assumptions, such as: Net sales are estimated to be approximately $44 billion; Identical store sales growth excluding fuel for the combined retail network, as if the acquired operations were in the store base for more than a year, is projected to be at the low end of the 1 to 2 percent range; Synergy benefit in the range of $40 million to $50 million pretax; Store development plans are projected to be approximately 20 to 22 standard size stores and 55 to 65 limited assortment stores, including licensed stores. Major remodels are estimated at approximately 110 to 120 stores and minor remodels are estimated at approximately 25 to 35 stores; Sales attrition, exclusive of new business, in the traditional food distribution business will approximate four to five percent for the year; The second and third quarter of fiscal 2008 will consist of 12 weeks of operating results of the acquired operations compared to 13 weeks for the second and third quarter of fiscal 2007; Stock option expense is projected to be approximately $0.12 per diluted share compared to $0.08 in fiscal 2007 representing the full-year impact of the acquired operations and the larger employee base of the company; Total capital spending is projected to be approximately $1.2 billion, including capital leases; and The effective tax rate is estimated to be 39 percent. A conference call to review the second quarter results is scheduled for today at 9:00 a.m. (CDT). A live Web cast of the call will be available at http://investor.supervalu.com. An archive of the call is accessible via telephone by dialing 630-652-3041 with passcode 19394806 and through the company’s Web site at www.supervalu.com. The conference call archive will be available through November 16, 2007. About SUPERVALU INC SUPERVALU INC. is one of the largest companies in the United States grocery channel with estimated annual sales of approximately $44 billion. SUPERVALU holds leading market share positions across the U.S. with its approximately 2,450 retail grocery locations. Through SUPERVALU’s nationwide supply chain network, the company provides distribution and related logistics support services to more than 5,000 grocery endpoints across the country. SUPERVALU currently has approximately 190,000 employees. For more information about SUPERVALU visit www.supervalu.com. CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Except for the historical and factual information contained herein, the matters set forth in this news release, including statements as to the progress and expected benefits of the combination of the operations of Albertson's, Inc. that were acquired in June 2006 with those of SUPERVALU, such as efficiencies, cost savings, synergies, market profile and financial strength, and the competitive ability and position of the combined company, and other statements identified by words such as "estimates," "expects," "projects," "plans," and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the possibility that the anticipated benefits from the acquisition cannot be fully realized or may take longer to realize than expected, the possibility that costs or difficulties related to the combination of Albertsons operations into SUPERVALU will be greater than expected, and the impact of competition, economic and industry conditions, security and food and drug safety issues, severe weather and natural disasters, escalating costs of providing employee benefits, and other labor relations issues including contract negotiations, expansion, liquidity, legal and administrative proceedings, regulatory and accounting matters, changes in operating conditions, and other risk factors relating to our business or industry as detailed from time to time in SUPERVALU's reports filed with the SEC. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Unless legally required, SUPERVALU undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. SUPERVALU INC. and Subsidiaries CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS (unaudited)     Fiscal Quarter Ended Fiscal Quarter Ended (In millions, except per share data)   September 8, 2007   September 9, 2006   Net sales Retail food and drug $ 7,977 $ 8,522 79% 80% Supply chain services 2,182 2,144       21%     20% Total net sales $ 10,159 $ 10,666       100.0%     100.0%   Operating earnings Retail food and drug operating earnings $ 385 $ 361 Supply chain services operating earnings 63 56 General corporate expenses     42     26 Total operating earnings 406 391 Interest expense, net     163     176 Earnings before income taxes $ 243 $ 215 Income tax expense     95     83 Net earnings   $ 148   $ 132     LIFO charge $ 11 $ 6   Depreciation and amortization Retail food and drug $ 206 $ 242 Supply chain services     22     22 Total   $ 228   $ 264     Note: SUPERVALU's second quarter of fiscal 2008 ended September 8,2007 and includes 12 weeks of combined results compared to the secondquarter of fiscal 2007 which included 13 weeks of acquired operations. SUPERVALU INC. and Subsidiaries CONSOLIDATED COMPOSITION OF NET SALES AND OPERATING EARNINGS (unaudited)     Fiscal Year-to-DateEnded Fiscal Year-to-DateEnded (In millions, except per share data)   September 8, 2007   September 9, 2006   Net sales Retail food and drug $ 18,400 $ 11,452 79% 70% Supply chain services 5,050 4,997       21%     30% Total net sales $ 23,450 $ 16,449       100.0%     100.0%   Operating earnings Retail food and drug operating earnings $ 834 $ 489 Supply chain services operating earnings 130 132 General corporate expenses     92     62 Total operating earnings 872 559 Interest expense, net     386     202 Earnings before income taxes $ 486 $ 357 Income tax expense     190     138 Net earnings   $ 296   $ 219     LIFO charge $ 19 $ 9   Depreciation and amortization Retail food and drug $ 501 $ 299 Supply chain services     51     52 Total   $ 552   $ 351     Note: SUPERVALU's fiscal 2008 year-to-date ended September 8, 2007and includes 28 weeks of combined results compared to fiscal 2007year-to-date which included 13 weeks of acquired operations. SUPERVALU INC. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)         Fiscal QuarterEnded Fiscal QuarterEnded (In millions, except per share data)   September 8,2007   % of sales   September 9,2006   % of sales   Net sales $ 10,159 100.0% $ 10,666 100.0% Cost of sales     7,826   77.0%     8,205   76.9% Gross profit 2,333 23.0% 2,461 23.1%   Selling, general and administrative expenses     1,927   19.0%     2,070   19.4% Operating earnings 406 4.0% 391 3.7%   Interest expense, net     163   1.6%     176   1.7% Earnings before income taxes 243 2.4% 215 2.0% Income tax expense     95   0.9%     83   0.8%   Net earnings   $ 148   1.5%   $ 132   1.2%     Earnings per common share Basic Net earnings $ 0.70 $ 0.63 Diluted Net earnings $ 0.69 $ 0.61 Weighted average number of common shares outstanding Basic 212 211 Diluted 216 220     Note: SUPERVALU's second quarter of fiscal 2008 ended September 8,2007 and includes 12 weeks of combined results compared to the secondquarter of fiscal 2007 which included 13 weeks of acquired operations. SUPERVALU INC. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)         FiscalYear-to-DateEnded FiscalYear-to-DateEnded (In millions, except per share data)   September 8,2007   % of sales   September 9,2006   % of sales   Net sales $ 23,450 100.0% $ 16,449 100.0% Cost of sales     18,034   76.9%     13,173   80.1% Gross profit 5,416 23.1% 3,276 19.9%   Selling, general and administrative expenses     4,544   19.4%     2,717   16.5% Operating earnings 872 3.7% 559 3.4%   Interest expense, net     386   1.6%     202   1.2% Earnings before income taxes 486 2.1% 357 2.2% Income tax expense     190   0.8%     138   0.9%   Net earnings   $ 296   1.3%   $ 219   1.3%     Earnings per common share Basic Net earnings $ 1.40 $ 1.26 Diluted Net earnings $ 1.37 $ 1.21 Weighted average number of common shares outstanding Basic 211 174 Diluted 216 184     Note: SUPERVALU's fiscal 2008 year-to-date ended September 8, 2007and includes 28 weeks of combined results compared to fiscal 2007year-to-date which included 13 weeks of acquired operations. SUPERVALU INC. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (unaudited)     September 8,2007   February 24,2007     ASSETS Current Assets Cash and cash equivalents $ 277 $ 285 Accounts and notes receivable, net 867 957 Inventories 2,823 2,749 Prepaid and other current assets     309     469 Total Current Assets 4,276 4,460   Land, buildings, leasehold improvements and equipment, net 7,388 8,415   Goodwill 6,913 5,921   Intangibles, net 1,980 2,450   Other assets     508     456   Total Assets   $ 21,065   $ 21,702   LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued liabilities $ 3,450 $ 3,548 Current maturities of long-term debt and capital lease obligations 346 286 Other current liabilities     863     871 Total Current Liabilities 4,659 4,705   Long-term debt and obligations under capital leases 8,590 9,192   Other long-term liabilities and deferred credits 2,126 2,499   Total Stockholder's Equity 5,690 5,306             Total Liabilities and Stockholders’ Equity   $ 21,065   $ 21,702