Fitch Ratings has confirmed the default ratings given for SuperValu as ‘CCC’ even with some divestitures announced last week that seemed to reduce the retailer’s exposure to many competitive pressures. These were counteracted, however, by deteriorating environment and high debt leverage in its businesses.
The ‘CCC’ default rating given implies very high risk.
Cerberus Capital Management and SuperValu had earlier entered into a $3.3 billion agreement in which the retailer would sell five retail chains to the consortium that Cerberus represented. The agreement divested the retailer the same chains that it had bought from Albertsons back in 2006.
Fitch said that comparing the retailer business today, even with the sale of the five chains, to its performance in 2006 before it had acquired Albertsons, revealed that SuperValu legacy business had deteriorated over the six years. Fitch compared the sales for the two fiscal years saying that they gave the whole story. SuperValu sales in the fiscal year ending 2006 February stood at $19.9 billion while those today are estimated to be $17.2 billion, which represented a 13% decrease and a decline in identical-store sales.
SuperValu was founded in 1870, but was then traded under the name B.S Bull and Company, which was later closed down and reopened by the same founders under the name Winston and Newell Company, which were running using U-Save and SuperValu banners.
The company has many banners including Albertsons, Cub Foods, Farm Fresh, Shaw’s, Save-A-Lot, Shop n Save and Jewel-Osco. The company was running about 4,400 stores, but about 60 were closed down in 2012 due to being “underperforming stores.”