Ahead of the Bell: Supervalu

NEW YORK -- A pair of analysts lowered estimates for Supervalu on Friday after the grocery chain reported softer-than-expected second-quarter results.

On Thursday Supervalu Inc., whose chains include Albertsons, Cub Foods, Jewel-Osco and Save-A-Lot, reported a loss of 52 cents per share. Adjusted for various items, its earnings broke even. Revenue fell 5 percent to $8.04 billion. Analysts polled by FactSet expected earnings of 12 cents per share on revenue of $8 billion.

Cantor Fitzgerald's Ajay Jain said in a client note that gross margin problems contributed to most of the earnings weakness. The analyst said that margins dropped more than expected in the quarter because shoppers were careful with their spending and looking for promotions.

Supervalu also said Thursday that it is still reviewing its strategic options, has received a number of indications of interest and is talking with several parties.

Jain said that "the only meaningful catalyst for the stock in the near-term is a full or partial sale of the business."

The analyst kept a "Buy" rating and $6 price target but lowered the company's third-quarter earnings estimate to 11 cents from 12 cents per share and cut its fourth-quarter forecast to 24 cents from 25 cents per share. Jain's 2013 estimate was reduced to 64 cents from 77 cents per share and the 2014 forecast was lowered to 61 cents from 73 cents per share.

Deborah Weinswig of Citi Investment Research said that Supervalu will likely need to sell assets to fund its competitive pricing strategy.

The analyst slashed her 2012 earnings estimate to 46 cents from 74 cents per share; reduced the 2014 forecast to 39 cents from 56 cents per share and lowered the 2015 estimate to 35 cents from 48 cents per share.

Weinswig maintained a "Neutral" rating and $2 price target.

Supervalu shares closed at $2.14 per share on Thursday. They are up 27 percent from a 52-week low of $1.68 in late July. They traded as high as $8.75 almost a year ago.