MINNEAPOLIS - Consumers could be the beneficiary of the financial struggles of the Supervalu supermarket chain.
"It's bad news for investors, but good news for shoppers," said Dr. David Vang, professor of finance at the University of St. Thomas.
The retailer's shares lost almost half their value Thursday, the day after the company, which owns chains including Albertson's, Save-A-Lot and Cub Foods, reported dismal first-quarter results including a 45 percent year-over-year drop in net earnings. Supervalu officials said they are $41 million down from $74 million a year ago.
"The reason their stock price fell was because of their announcement that they're doing a massive cut in their food prices in order to be competitive," said Vang.
Some of those lower prices could be seen by later this summer as Supervalu tries to draw in more shoppers in hopes to rebound in the short-term.
"It's a competitive environment now," says Vang. "There are more big-box stores selling groceries now than ever did in the past."
Vang points out that Supervalue stores, like Cub Foods, are caught in the middle between high-end grocery stores and bargain-basement locations.
"Either of those strategies will be difficult for them to do," he says. "If they go high-end, they have too many stores, but if they go low-end they may have to find different suppliers than what they have."
Supervalu plans to make cuts companywide in the years to come, but plans to sell the company completely are still being discussed.