Supervalu Inc. on Wednesday reported a worse-than-expected 2.6% decline in third-quarter revenue as the supermarket chain continues to face increased competition.

Shares of Supervalu, down 35% to $6.01 over the past year, were unchanged in premarket trading.

"We continue to operate in a challenging environment," Chief Executive Sam Duncan said. "Improving sales is a primary focus as we look to complete the fiscal year." Mr. Duncan has said he would retire from the company next month after joining in early 2013.

Supervalu owns supermarket chains including Cub, Fresh Farm and Shop n' Save, as well as a distributor arm that works with independent grocers. As with many of its peers, Supervalu has struggled to distinguish itself in the highly competitive supermarket industry.

Supervalu has been left in an unappealing middle ground as low-price, no-frills chains have attracted cost-conscious customers, and specialty chains led by Whole Foods Market Inc. have lured wealthier shoppers.

Last week, the company said it plans to spin off its hard-discount division, Save-A-Lot, into its own public company. Supervalu has said spinning off Save-A-Lot would help investors better understand and value the low-price, no-frills chain, which has been a rare bright spot for the company.

Save-A-Lot was responsible for 26% of the company's sales in the most recent quarter. Supervalu didn't set a deadline for taking Save-A-Lot public, and there is no guarantee the spinoff will occur.

For the fiscal quarter ended Dec. 5, Supervalu's earnings fell to $34 million, or 13 cents a share, from $79 million, or 30 cents a share, a year prior. Excluding severance costs and expenses related to the potential Save-A-Lot spinoff, per-share earnings were 16 cents.

Revenue fell to $4.11 billion from $4.23 billion a year prior.

Analysts polled by Thomson Reuters had forecast 16 cents a share in profits on $4.16 billion in revenue.

The company said sales within its large distributor arm decreased 3.5% to $1.9 billion. Same-store sales at its retail food division fell 2.6% amid a 3.4% same-store drop at Save-A-Lot stores.

Write to Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

January 13, 2016 09:55 ET (14:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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