MINNEAPOLIS — Competition in the grocery business is prompting Minneapolis-based Supervalu, Inc. to pursue the sale of its Shop ‘n Save and Shop ‘n Save East retail operations. Shop ‘n Save operates stores in the St. Louis area while Shop ‘n Save East operations are located in West Virginia, Maryland, Pennsylvania and Virginia.

“These stores have faced challenges for some time now, and we’re undertaking actions that we believe are in the best interest of our business and shareholders,” Mark Gross, president and chief executive officer, said during an April 24 conference call with analysts. “We’re working with advisers to assist with the process and are optimistic that interested buyers would retain many of our employees. Any net proceeds from store sales are planned to be used to further pay down debt.

“Exiting from our Farm Fresh banner and our announcement to pursue the sale of two others demonstrates our efforts to transform this company and make Supervalu an increasingly wholesale-oriented company.”

Additionally, Supervalu announced it has entered an agreement to sell eight of its distribution centers to an undisclosed buyer for approximately $483 million. Following the sale of the centers, Supervalu said it plans to enter into lease agreements for each of the centers for an initial term of 20 years with renewal options.

Shop 'n Save store, Supervalu“Monetizing a portion of our industrial real estate will delever our balance sheet and better position us to take advantage of future strategic opportunities,” Mr. Gross said. “We will continue to evaluate the balance of our owned real estate portfolio for further value-enhancing opportunities.”

The news comes after Supervalu in March announced it is selling 21 of its 38 Farm Fresh Food & Pharmacy locations for approximately $43 million.

Net income at Supervalu in the year ended Feb. 24 totaled $45 million, equal to $1.18 per share on the common stock, down sharply from $650 million, or $17.17 per share, in the same period a year ago. Results in fiscal 2017 include $619 in income from discontinued operations.

Net sales in fiscal 2018 totaled $14,157 million, up 30% from $10,912 million in fiscal 2017.

Supervalu said it ended fiscal 2018 on a good note, with initiatives put in place growing in importance with shoppers. Specifically, Mr. Gross mentioned the strength of Supervalu’s fresh departments, including produce and meal.

Supervalu Quick & Easy meal kit“Produce ideas were up nearly 5% in the quarter, which we attribute to the strategic investments in our perishable departments, including improved layouts, new fixtures and signage, as well as an increased focus on quality,” he said. “Organic produce sales were up nearly 7%, including an increase in units sold of nearly 3%. Sales of meal solutions also increased about 5%, led by our Quick’n Easy offering that continues to evolve and grow across the network. We are adding new items and flavor sensations to our existing offerings to satisfy the ever-evolving taste profile of today’s time-starved consumer.”

Mr. Gross said the company also is seeing strong growth in e-commerce sales.

“We remain committed to offering a multichannel solution to our customers that provides them the options of where and how they want to shop for groceries and meal solutions,” he said. “Overall, we’re seeing e-com transaction sizes that are 2.5x that of a typical in-store purchase, and we’re continually refining our marketing messages to these customers as we learn more and more about their shopping habits and motivations.”

Finally, Supervalu has benefitted from the strength of its private brands portfolio, which comprises more than 5,000 unique items. Mr. Gross described private brands as “essentially, a small C.P.G. company within Supervalu.” He said the company introduced about 350 new stock-keeping units during fiscal 2018.