Supervalu Inc. (SVU) warned that its first-quarter profit would fall “substantially below” analyst forecasts as shoppers cut back on spending on items with the deepening recession.

“Consumers have become more value-focused and cautious in their spending, which has pressured sales and margins greater than anticipated,” the second-largest U.S. grocery chain’s newly appointed Chief Executive Craig Herkert said on Wednesday. Eight analysts on an average were expecting Supervalu to earn 65 cents in the quarter.

The Eden Prairie, Minnesota-based company expects same-store sales to fall by 3% even after it slashed prices and boosted promotions to attract shoppers to its Shaw’s, Save-A-Lot and Shop ‘n Save stores. Increased competition from larger rivals like Wal-Mart Stores Inc.(WMT) have further added to Supervalu’s woes.

Supervalu shares fell the most in four months to $13.52 on the New York Stock Exchange before paring some losses to trade down more than 12% to $13.77 at midday.

“SVU” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Last 5 posts by Zacks Market Commentaries

• CNP & FPL Ink Pipeline Deal - Analyst Blog - November 20th, 2009
• Buffett Borrows for Rail Acquisition - Analyst Blog - November 20th, 2009
• Stone Energy Outdoes Estimates - Analyst Blog - November 20th, 2009
• Smucker's Beats, Raises Guidance - Analyst Blog - November 20th, 2009
• GameStop Meets Expectations - Analyst Blog - November 20th, 2009