Merger Paying Off As Sales Rocket Upward At SpartanNash
Grand Rapids, Mich.-based SpartanNash Co. reported consolidated net sales for the second quarter of $1.8 billion vs. $651.1 million last year, an increase of 178 percent, primarily due to $1.2 billion in sales generated as a result of the November 2013 merger of Spartan Stores and Nash Finch.
Reported operating earnings increased 115.3 percent to $32.6 million compared to $15.2 million for the prior-year quarter, primarily due to contributions from the merger. The company said the increase was partially offset by the impact of low inflation, increased integration, restructuring and asset impairment charges, additional LIFO expense and a pension settlement accounting charge.
“We have also made significant progress with our merger integration efforts and remain committed to providing excellent service and value to all of our retail, food distribution and military customers,” said SpartanNash President and CEO Dennis Eidson.
Net sales for the food distribution segment increased 182.4 percent to $767.9 million in the second quarter from $271.9 million for the second quarter last year. The increase in sales was due to $501.4 million in sales from Nash Finch, partially offset by the negative effect of the change in timing of the Easter holiday and a reduction to the Supplemental Nutrition Assistance Program (SNAP).
Net sales for the retail segment increased 42.4 percent to $539.8 million in the second quarter from $379.2 million for the second quarter last year, primarily due to $184.9 million in sales generated as a result of the merger and new and remodeled stores. Comparable store sales, excluding fuel, were flat to the prior year, which the company attributed to the later timing of Easter and SNAP benefits reduction. Retail sales reflect $17.1 million in fewer sales due to store closures as well.
Two supermarkets were sold to distribution customers and one underperforming supermarket was closed during the second quarter. Also during the quarter, three major remodels were completed and the company began construction on two new stores. SpartanNash ended the quarter with 166 corporate-owned stores and 30 fuel centers.
Net sales for the company’s military segment were $502.4 million.
Spartan Nash anticipates third quarter net sales will be at or slightly below third quarter results last year. For the fiscal year, the company is maintaining its previously issued guidance of consolidated net sales in the range of $7.90 billion to $8.04 billion.
“As we look to the second half of the year, we remain optimistic that we are in a position to deliver our sales and earnings outlook for fiscal 2014, despite the lack of non-perishable inflation, negative impact of the reduction in SNAP benefits and competitive openings,” Eidson said. “We will continue to invest in the consumer experience by completing five major remodels and re-banners and opening one new store in West Lafayette, Ind.”
The company continues to expect capital expenditures for fiscal year 2014 to be in the range of $77.0 million to $82.0 million.
SpartanNash currently operates 166 supermarkets primarily under the banners of Family Fare Supermarkets, D&W Fresh Markets, Family Fresh, No Frills, Bag ‘n Save, Sun Mart and Econofoods.