Supervalu (NYSE:SVU) Asks Suppliers to Help Provide Customers Value

Supervalu (NYSE:SVU) has a huge challenge in attempting to win back consumers to the store, and while laying out an ambitious plan to that effect, have asked suppliers to partake in helping them provide better value to their customers.

Barclays says, "SVU has ambitious plans to change its entire merchandising approach while also cutting operating costs significantly. It is asking its major suppliers for help in providing value to its customers, but we're not sure that SVU will get what it wants, and this could force more of the necessary investments in everyday price to come from SVU's profits. Even if it gets support, we expect the process of winning customers back to take a long time. We see little probably that the company will sell any major assets, nor do we think that would be good for investors since it would compound a serious expense de-leveraging problem. Yet cash flow remains solid, and the company continues to pay down debt.

"The company has a comprehensive plan to improve results, but we believe the next year or so will remain challenging, so we are lowering our 4Q11 EPS to $0.33 from $0.42, our FY11 EPS to $1.27 from $1.43, and our FY12 EPS to $1.13 from $1.50."

Barclays maintains an "Equalweight" rating on SuperValu Inc., which was trading at $7.66, gaining $0.07, or 0.92 percent, as of 3:08 PM ESt. Barclays lowered their price target on SuperValu from $11 to $8.