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SUPERVALU F2Q08 (Qtr End 9/8/07) Earnings Call Transcript

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2007-10-16 10:02:35.0

Tags: SUPERVALU Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Deborah Weinswig from Citigroup. Please go ahead.

Charmaine Tang - Citigroup

Good morning. It’s Charmaine Tang for Deb Weinswig. Can you talk a bit about the impact of food inflation, what you saw in the quarter?

Jeff Noddle

As we commented in the first quarter, we said that food inflation was running higher as we enter this new year, between 2% and 3%. I think we said in the first quarter that we were trending toward the high side of that number. That is pretty consistent with what we saw in the second quarter, so I think the trends really are no different than they were in the first quarter. We are still hopeful that we’ll see some abatement but we’ve seen oil prices spike here recently and although some commodity prices have improved somewhat, it is still not enough to say that we see a lower run-rate during the third quarter but we are still hopeful as we move through the year that we’ll see some abatement, particularly in the meat and dairy complex.

Charmaine Tang - Citigroup

And then just one other question; can you share some of your recent observations on your core customer? Specifically, did you see any trading down behavior during the quarter?

Jeff Noddle

Well, we also made the comment in the first quarter -- and let me prepare that comment by saying remember, we look across probably a broader spectrum than most food retailers when we comment on how the consumer is reacting because we are looking through a window that includes the Save-A-Lot customer, which is a lower income demographic, all the way through more traditional to even the high end as well. And we did make a comment that we did see some trading down, particularly looking at our Save-A-Lot, through our Save-A-Lot window.

Those trends were fairly consistent in the second quarter as well, so the trend we saw in that regard I think continues. I think it is not of any great surprise with the pressure from fuel prices, the resets of home mortgages. I think those issues clearly are making people more prudent in their grocery shopping and we think because of our wide spectrum, we have a great window and a good opportunity in that regard.

Charmaine Tang - Citigroup

Great. Thank you.

Operator

Thank you. Our next question comes from John Heinbockel from Goldman Sachs. Please go ahead.

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