How To trade Supervalu's Weak Earnings (SVU)

Supervalu SVU is dropping sharply in pre-market trading, after the company reported worse than expected arnings. The company reported third quarter sales of $8.07 billion, with a loss of $202 million in net income, or 95 cents per share. Craig Herkert, SUPERVALU's chief executive officer and president, was not happy with the results. Herkert said, “Our performance is still not close to my expectations and we continue to take action to change the trajectory of our businesses. Through our business transformation process, we will invest in price, leverage our buying power and enhance retail execution. These measures underscore our commitment to deliver everyday value to our customers as we execute on our vision of being America's Neighborhood Grocer.” Given these results, can we can expect to see the name from the other grocers, like Safeway Inc. SWY? I would expect the lower end retailers who will have the problem of raising prices due to rising food inflation miss estimates. Higher end grocers such as Whole Foods Market WFMI should fare better, as the clientele can eat the price increases and have it not really affect their shopping plans. In the earnings release, Supervalu cut its 2011 EPS view to $1.25 to $1.35 per share. At last check, shares of Supervalu were off 52 cents yesterday to close at $8.07, a loss of 6.05%.