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FinanceFortune 500

Biggest laggards of the Fortune 500

By
Kia Kokalitcheva
Kia Kokalitcheva
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By
Kia Kokalitcheva
Kia Kokalitcheva
Down Arrow Button Icon
June 20, 2015, 3:00 PM ET
<h1>Supervalu</h1>
The grocery store network, which operates over 5,000 locations across the U.S., continues to push forward with its turnaround: an eight-pronged strategy to simplify its business and focus on the demands of each neighborhood. Getting there, however, is proving tough. Same-store sales fell across all three business segments -- traditional retail food, Save-A-Lot discount grocery chain, and independent businesses -- and this past March, Supervalu announced it was eliminating 1,100 jobs nationwide, or 3% of its workforce.
<h1>Supervalu</h1> The grocery store network, which operates over 5,000 locations across the U.S., continues to push forward with its turnaround: an eight-pronged strategy to simplify its business and focus on the demands of each neighborhood. Getting there, however, is proving tough. Same-store sales fell across all three business segments -- traditional retail food, Save-A-Lot discount grocery chain, and independent businesses -- and this past March, Supervalu announced it was eliminating 1,100 jobs nationwide, or 3% of its workforce. Photograph by Ariana Lindquist — Bloomberg/Getty Images
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Grocery chain Supervalu (SVU) tumbled down this year’s Fortune 500 list to such an extent that it earned an ignominious distinction: the biggest drop in rank.

The company, No. 164 in our annual corporate ladder based on sales, fell 70 spots from last year after selling off parts of its business in a corporate restructuring. It had been No. 94.

So goes the ebb and flow of corporate America. It’s a rare company with revenue that rises in a straight steady line. Indeed, Supervalu had ample company in reporting lower sales. A number of well-known businesses suffered declines that were caused by everything from lower investment returns to war effort winding down in the Middle East.

Supervalu, based in Eden Prairie, Minn., has 3,400 stores that it owns, licenses, or franchises under various names including Save-A-Lot, Shop n’ Save, and Cub Foods. In January 2013, current CEO Sam Duncan took over, and has since been on mission to get the company back on track by off-loading Acme, Albertsons, Jewel-Osco, Shaw’s, and Star market to an investor group among other downsizing efforts.

Last year, Supervalu reported profits unlike like its big loss in the prior year. But at the same time, its revenue dropped 46% to $18.4 billion.

MORE: Read about Apple on the Fortune 500

In some bad news, Supervalu said in August that it had suffered a data breach. The company then followed up a month later by admitting that it had also discovered malware on point-of-sale systems in some of its Shop ‘n Save, Shoppers Food & Pharmacy, and Cub Foods franchises, a few associated liquor stores, and some of Albertson’s grocery stores.

Although Duncan has been able to shift Supervalu from a near-$1.5 billion loss in the first quarter of his tenure to profitable quarters from then on, the company still faces challenges. Large retailers like Walmart and Target have been stepping up their grocery game by adding more pressure in the competitive grocery industry.

Kohlberg Kravis Roberts, aka KKR (KKR), the New York City-based private equity firm most famous for its leveraged buyout of RJR Nabisco in 1989, also had a less than stellar 2014. The firm’s revenue declined 18.3% from the previous year, leading the company to a 68-spot fall to No. 356 on the latest Fortune 500 list.

But KKR probably doesn’t care much. When KKR first entered the usually coveted Fortune 500 club in 2011, it publicly stated that while flattering, its inclusion didn’t properly reflect its performance. It blamed an “accounting oddity” for its initial appearance on the list (fees income was lumped together with investing income). Since then, the company’s rank has yo-yoed up and down — and off — the list.

Rounding the lead weights on the Fortune 500 is KBR (KBR), a Houston-based engineering and construction company that slid down by 64 spots to No. 424 on this year’s list because of an 11% sales decline. For the record, KBR ended 2014 with a loss of nearly $1.3 billion for the former subsidiary, Halliburton, which sold off KBR in 2007.

KBR was a big contractor for the wars in Iraq and Afghanistan. With the U.S. pulling out, the company took a financial hit. In an effort to adjust, KBR announced major restructuring in December with the goal of cutting annual operating costs by $200 million by 2016, though. The company could still incur a $1 billion loss in the process.

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By Kia Kokalitcheva
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