Albertsons 2016 Annual Report Download - page 32

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30
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Dollars and shares in millions, except per share data)
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction
with the audited Consolidated Financial Statements and the information contained under the captions “Risk Factors” and
“Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act” contained
in this Annual Report on Form 10-K.
MANAGEMENT OVERVIEW
Business Overview
Supervalu operates its business in three segments: Wholesale, Save-A-Lot and Retail. Supervalu, through its Wholesale
segment, is one of the largest wholesale distributors to independent retail customers across the United States. Save-A-Lot is one
of the nation’s largest hard discount grocery retailers by store count. The Company's Retail business operates traditional
grocery stores under the five regionally-based banners of Cub Foods, Shoppers Food & Pharmacy, Shop 'n Save, Farm Fresh
and Hornbacher’s, and also operates two retail stores under the Rainbow banner and two retail stores under the County Market
banner. The Company leverages its distribution operations by providing wholesale distribution and business service solutions to
its independent retail customers and distribution to its Retail stores through the Wholesale segment. The Company's Save-A-
Lot distribution operations are leveraged by providing wholesale distribution and service solutions to its licensees, and
distribution to Save-A-Lot corporate stores.
Business Strategies and Initiatives
The Company continues to be focused on increasing sales and operating cash flow, improving its balance sheet and generating
returns for its stockholders. Effective February 5, 2016, Mark Gross was appointed as the Company’s President and Chief
Executive Officer. The Company’s vision, which has and will continue to guide its strategic and operational decisions, is for the
Company to be the leading distributor of consumable products and provider of services to retailers in the United States.
Initiatives in each of the Company’s segments include:
Wholesale:
• Targeting sales growth by continuing to affiliate new customers, including affiliations of larger chain businesses, and more
aggressively pursuing external growth and market opportunities
• Driving sales to existing customers by enhancing the Company's offerings through professional services, including
merchandise and promotional planning, design and back-office technical and financial services, and product offerings,
such as produce
• Improving the efficiency of the Company's operations, including its IT infrastructure and maximizing the use of trucking
miles and warehouse capacity
• Strengthening core merchandising and marketing programs, including leveraging the Company's private-label programs
such as the Essential Everyday® and Equaline® labels while marketing and adding depth to the Wild Harvest® and
Culinary Circle® brands
• Reducing inventory shrink rates within the Company's warehouses
Save-A-Lot:
• Increasing sales and performance in the existing Save-A-Lot network of stores by expanding the sales per square foot of
existing corporate stores through store resets, product assortment alterations, ad strategy changes, continued refinement of
private-label programs, and differentiation through fresh offerings
• Growing the Save-A-Lot store footprint through new corporate and licensed store openings
• Optimizing the store network; opportunistically converting corporate stores to licensed stores and vice versa for profitable
growth
• Improving operational efficiencies and managing costs to offer compelling value to customers
Retail:
• Driving profitable sales by investing in price, optimizing promotions and enhancing product offerings and displays with
local, growing and private label categories
• Driving store performance by managing inventory levels and reducing inventory shrink rates, as well as standardizing
certain store processes