Supervalu's future lies in wholesale

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Supervalu (NYSE:SVU) may have recently purchased Rainbow food stores in the Twin Cities, but the company is clearly focused on its wholesale business with no intention of rebuilding a store network.

The purchase was made in May by Supervalu and other investors and was strictly in anticipation of becoming Rainbow's supplier. "We wanted the business as our wholesale customer," announced CEO Sam Duncan at the company's annual shareholder meeting.

Once the changeover of the 18 Rainbow supermarkets is complete, 10 of them will be Cub Food locations, two will be Byerly's and six will remain Rainbows, reported Pioneer Press. The purchase was a $65 million deal for a majority of Rainbow's 27 stores.

The remaining nine Rainbows are under parent firm Roundy's.

"I have no desire to be a big retailer—none," Duncan said. "We are a great wholesaler, that's what we're good at. That's what our focus is going to be for this company, it's the largest part of our organization."

Supervalu was one of the country's largest grocery retailers until last year when it sold four of its biggest supermarket operations, cutting Supervalu's annual revenue to $17 billion. Soon after, Duncan was made CEO. He is largely credited for stabilizing the company. Supervalu saw more leadership changes this past June when former Target executive Gerald Storch was elected to be the new chairman of the board.

The company does, however, plan to grow its discount supermarket chain Save-A-Lot, reported the Star Tribune.

For more:
-See this Pioneer Press article
-See this Star Tribune article

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