SUPERVALU Inc. (SVU) reported results for the fourth quarter of fiscal 2010 with earnings of 62 cents per share. Earnings were a penny above the Zacks Consensus Estimate of 61 cents, and were an improvement on the loss of 95 cents in the prior-year quarter.

Net sales for the quarter declined 15% year-over-year to $9.2 billion, primarily due to declines in the Retail Food segment and Supply Chain Services. Net sales in Retail Food were down 15.2% to $7.2 billion due to a 6.8% negative impact from the same-store sales.

Net sales in the Supply Chain Services segment declined 14% year-over-year to $2.0 billion. The decline was due to the impact of the previously announced plans by Target (TGT) to transition some of the volume to self-distribution.

Total retail square footage at the end of the fourth quarter was approximately $65 million, reflecting a 6.2% decline from the fourth quarter of fiscal 2009.

Gross margin for the quarter expanded 52 basis points (bps) to 23.4% compared to 22.9% in the prior-year quarter. The benefits from pricing and promotional activities were partially offset by a lower LIFO (Last-In, First-Out) charge.

The company reported an operating profit of $286 million compared to an operating loss of $63 million in the prior-year quarter. Interest expense for the fourth quarter was reduced by 12.8% to $130 million compared to $149 million last year, reflecting lower interest rates and reduced borrowing levels.

Net cash flows from operating activities for the year were $1.4 billion compared to $1.5 billion in the prior year. Capital expenditures for the year reached $0.7 billion.

Based on the fourth quarter results, management provided guidance for fiscal 2011. The company expects to generate earnings on GAAP basis within the range of $1.65 to $1.85, including an estimated $0.10 in additional charges primarily related to the completion of retail market exits in Connecticut and Cincinnati in the first quarter of fiscal 2011.
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