Nash-Finch Q1 Earnings Beat Estimates

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Nash-Finch Q1 Earnings Beat Estimates

Nash Finch Co.’s first quarter earnings beat analysts’ expectations and sent its stock up last Friday by more than 5 percent. The Minneapolis-based distributor and retailer posted $8 million in earnings, or 59 cents per share, for its 12-week first quarter ended March 27, 2010, down sharply from the $14 million, or $1.08 per share, it posted in the prior year period.

Excluding significant one-time charges in each of the financial periods, Nash-Finch’s earnings would have been 59 cents per share this year and 57 cents in the first quarter of last year.

Net sales, meanwhile, increased 3.5 percent to $1.2 billion, up from $1.1 billion, attributable largely to first quarter sales gains related to its acquisition of three military distribution centers at the end of January 2009. Excluding the acquisition, total sales in the quarter decreased 1.8 percent to $59.4 million relative to last year.

Nash Finch’s same store sales also declined 3.7 percent during the quarter vs. the prior year, while the company also closed four stores since the end of the first quarter 2009.

Commenting on a trying first quarter, Alec Covington, Nash Finch’s president and CEO, said while results were in-line with expectations, “the trends in price deflation and consumer shopping patterns continued to impact top line sales in the food distribution and retail industry. We believe these economic headwinds will continue this year. As a result, we are implementing strategic initiatives to increase our supply chain efficiency and reduce our overhead and administrative expenses. We continue to have a strong balance sheet with plenty of liquidity.”

In related news, Covington also discussed changes the company initiated in the first quarter, for which it allocated overhead costs to the segment EBITDA amounts reported for the current and prior years.

“We made this change to provide greater visibility into the company’s operations as there are fundamental differences between our military, food distribution and retail segments and allocating overhead based on use by segment provides better clarity on the net EBITDA results of each segment," said Covington. "We believe the additional detail we are providing by segment allows shareholders to more easily understand the unique characteristics of each business unit allowing for a more appropriate valuation of our equity,” he continued, noting that Nash Finch is not only “a well positioned food wholesaler, but is also the nation's premier supplier to military commissaries at home and abroad."