Why Shares of Supervalu Inc Fell 14% in October

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What happened

Shares of grocer Supervalu Inc. (NYSE: SVU) fell 14% in October, according to data provided by S&P Global Market Intelligence, after the company announced an asset sale and fiscal second quarter earnings.

So what

Supervalu announced the sale of Save-A-Lot for $1.365 billion in cash to Onex Corporation. The money will be used to repay at least $750 million in debt on a term loan.

Quarterly results didn't leave much for investors to be excited about either. Sales from continuing operations fell 4.8% to $3.87 billion, and net income was just $31 million, or $0.11 per share.

Now what

Everything from wholesale to retail sales was down in the quarter as Supervalu's business continues to deteriorate. And that deterioration puts a lot of focus on the $2.2 billion in debt on the balance sheet at the end of last quarter, leaving a lot of risk even after a debt reduction from the Save-A-Lot sale. I just don't see any reason to be bullish on the stock today considering the debt and a decline in operations as a whole.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.