Albertsons 2002 Annual Report Download - page 4

At the same time, we committed to reducing overall debt
levels through a comprehensive companywide effort to:
Monetize assets where appropriate
Lower our future cost of capital with financing strategies
Aggressively manage our inventory levels.
Despite the scope of the undertaking and the difficult economic
environment, the ability of SUPERVALU to end this important tran-
sition year with such strong marks is a testament to the sound
business plan and dedication of our capable employees. One
highlight of this year’s success was our ability to consecutively
improve our retail comparable sales during the year. Fourth
quarter comparable sales were positive 1.3 percent.
Expanding Retail Success
Coming from a position of strength in several markets,
SUPERVALU became an even stronger leader in the price
impact retailing segment.
For the first time in our company’s history, retail represented
the majority of SUPERVALU’s overall sales and profits by the
end of the fourth quarter. The significance of this shift is driving
improved operating margins, increased purchasing power in the
supply chain that benefits all our customers and enhanced stock
valuation. The changing business mix demonstrates the impor-
tance of our retail segment as a growing part of SUPERVALU’s
overall success.
In Fiscal 2002, we opened 103 new Save-A-Lot stores, of
which 49 were corporate-owned, 11 price superstores and one
traditional supermarket.
We continued our aggressive store remodeling this year.
Twenty-four stores were remodeled during the year, with another
eight stores currently in progress. In the last seven years, 65 per-
cent of our stores are new or newly remodeled.
Specific retail activities that supported this year’s operating
performance included a more focused merchandising program
that strengthened our EDLP price position in our respective price
impact markets. Our traditional supermarkets are top of class
by continually delivering the best service and product selection.
And lastly, Save-A-Lot continues its fast track expansion program
opening store number 1,000 early this spring. During Fiscal 2002,
Save-A-Lot entered the Gulf Coast, Chicago and Baltimore
markets and launched the second wave of national broadcast
advertising – boosting its reputation as a fast growing extreme
value grocery retailer in the country.
We have strengthened our core competencies in retail with
these and other activities – creating excitement and a sense
of momentum about the future of SUPERVALU’s growing
retail business.
Designing a More Efficient Distribution Network
Our platform for growth in distribution was further strengthened in
Fiscal 2002. Last year, we committed to maximizing the efficiency
of our distribution network. In last year’s annual report I wrote,
“Fiscal 2002 will mark the year this network reconfiguration takes
place.” I am happy to report we made substantial progress while
maintaining all critical service levels across our network. We main-
tained 99.5 percent order accuracy and 97 percent on-time deliv-
ery. Few others can claim this consistent service performance.
Dear Stakeholders,
Fiscal 2002 was a terrific year. I am very proud of the SUPERVALU
leadership team and all our employees for the tremendous effort they
put forth this year to address significant challenges in both businesses
as we phased out the Kmart business and began a swift recovery in our
retail operations.
I announced on April 10th that I would step down as chairman and
as a director of SUPERVALU after the annual meeting in May. Jeff Noddle
will assume the role of chairman at that time. The transition of leadership
that the board of directors and I began working on approximately four
Mike Wright, SUPERVALU chairman and former CEO, received two top food
industry awards this spring: FMI’s prestigious “Sidney R. Rabb Award” and
FDI’s prized “Herbert Hoover Award”. These honors recognize Mike’s career-
long contributions to the food industry as well as his on-going commitment
as a true champion for education and community involvement.