Nash Finch Posts $43M Q4 Net Loss

Nash Finch Co. posted a fourth-quarter net loss of $43 million, or $3.20 per share, vs. a profit of $5.41 million or 41 cents per share, in the prior-year quarter, while sales for the 12-week period ended Jan. 2, 2010, of $1.22 billion were up 3 percent vs. $1.19 billion in the 13-week prior-year period.

The Minneapolis-based food distributor’s fourth-quarter results were hampered by $52 million, or $3.83 per share of charges, which, if excluded, would have enabled it to earn a 63-cent-per-share profit for the quarter. Analysts had projected a fourth-quarter profit of 74 cents per share, excluding special items, which sent the company’s share price almost 10 percent downward in afternoon trading Thursday after missing expectations.

Meanwhile, Nash Finch’s revenue rose 2.9 percent to $1.2 billion in the fourth quarter, meeting analysts’ expectations, while sales in its military division rose nearly 43 percent to $477 million, alongside a revenue decline in its food distribution business of nearly 13 percent and a 12 percent slip in retail division sales.

The company also said it lost a supply agreement with one portion of a buying group that will reduce its annual revenue by less than 3 percent.

“In the fourth quarter, the food distribution and retail industry continued to feel the impact of shifts in consumer-shopping patterns and price deflation, and we were no exception,” noted Alec Covington, Nash Finch’s president and CEO. “However, we continued to focus on things we could control, such as the proactive management of expenses and debt reduction, which helped us to achieve a strong free cash flow to net assets ratio above 10 percent for the year.”

Anticipating continued harsh “industry headwinds to continue,” Covington said, “We remain focused on strategic priorities that can drive long-term shareholder value, such as prudent management of our balance sheet and financial liquidity, additional investment opportunities in our military business that can drive further growth, and opportunistic acquisitions.”

Sales for fiscal 2009 were $5.2 billion vs. $4.6 billion in the prior year, an increase of 12.5 percent. Excluding the $683 million of sales attributable to the acquisition of three military distribution centers at the end of 2009, and the extra week of sales in fiscal 2008, total company comparable sales for fiscal 2009 fell 0.6 percent.

Looking ahead, Covington said Nash Finch is committed to expanding its military business, including the opening of a 400,000-square-foot distribution center in Columbus, Ga., in 2010 to complement its military distribution centers in the Southeast. “This will allow us to better serve the commissaries in that region and will provide significant transportation savings as well as long-term strategic growth opportunities,” observed Covington.

“We will continue to implement supply chain and working capital initiatives across our business segments as we work to achieve our long-term financial targets,” he continued. “In 2010, in addition to expanding our military facilities, we remain committed to adding new food distribution customers, and we will focus on initiatives that reduce administrative and operating expenses. We will also continue to strengthen our balance sheet and reduce debt. We are well positioned and have the financial capacity to make investments in support of our strategic plan.”
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