SpartanNash Co. this week reported financial results for the 16-week first quarter ended April 19.
Consolidated net sales for the first quarter increased 199.1 percent to $2.3 billion compared to $780.3 million last year, primarily due to $1.5 billion in sales generated as a result of the November 2013 merger with Nash Finch Co. as well as a comparable store sales increase of 2.5 percent and new business gains in the food distribution segment. In addition, first quarter sales benefited from the later timing of the Easter holiday, which resulted in the post-Easter week of low volume sales moving out of the first quarter and into the second quarter this year accounting for an estimated 70 basis points in comparable store sales.
Reported operating earnings were $27.6 million compared to $21.1 million for the prior-year quarter. The increase was primarily due to contributions from the merger with Nash Finch, partially offset by merger integration costs of $4.2 million, higher LIFO and stock compensation expense and the impact of low inflation.
“We are pleased to deliver a quarter of very strong earnings growth,” said Dennis Eidson, SpartanNash’s president and CEO. “Our results were driven by our merger with Nash Finch, favorable weather events early in the quarter and the timing of the Easter holiday this year. We continue to be pleased with the retail sales trends in our Michigan stores and generated a 2.5 percent increase in comparable store sales for the quarter, representing our third consecutive quarter of positive comparable store sales. While we are early in the integration process, we are highly encouraged by our progress to date on the integration plan and ability to achieve our $52 million synergy target. We look forward to continuing to leverage our combined retail, food distribution and military operations to realize our long term growth opportunities.”
Food distribution segment
Net sales for the food distribution segment increased 188.4 percent to $971.0 million in the first quarter from $336.7 million for the first quarter last year. The increase in sales was due to $619.6 million in sales from Nash Finch and new business gains, as well as the timing of the Easter holiday.
Net sales for the retail segment increased 53.0 percent to $678.6 million in the first quarter from $443.6 million for the first quarter last year. The increase in sales was primarily due to $241.4 million in sales generated as a result of the merger and a 2.5 percent increase in comparable store sales, excluding fuel, as well as the benefit from the later timing of Easter. These gains were partially offset by $15.6 million in fewer sales due to the closure of certain stores and lower retail fuel prices compared to the prior year.
During the first quarter, the company completed three major remodels and store re-banners and closed three underperforming supermarkets, one of which was subsequently sold during the second quarter. SpartanNash ended the quarter with 169 corporate-owned stores and 32 fuel centers.
Net sales for the company’s military segment were $684.2 million and operating earnings were $5.6 million for the first quarter of fiscal 2014.
“While we remain very optimistic about the opportunities created by the merger with Nash Finch, the overall food retail environment remains challenging in the short term given the lack of center store inflation and a continued cautious consumer,” Eidson said. “During the second quarter, we will continue to benefit significantly from the newly merged business, but will be facing difficult sales comparisons in our legacy business due to the cycling of a retail store acquisition and a new distribution customer and our recent store closures. We will continue to take steps to drive our top and bottom line, including investing in all three of our segments, refining our promotional efforts and strengthening our private brand offerings and loyalty programs. During the second quarter, we plan to complete three major remodels and re-banners and to begin major remodeling efforts on four more stores. Additionally, we plan to begin construction on two new stores, one of which is scheduled to open in the third quarter and the other is scheduled to open in early 2015.”