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Nash Finch Q1 Net Doubles; Sales Drop 1 Percent

Nash Finch Co.’s first quarter profits more than doubled, helped by a reduction in bad debt reserves and lower expenses. For the period ended March 22, the food distributor reported income of $11.3 million, or 85 cents per share, vs. $5.3 million, or 39 cents per share, in the year-ago period.

Nash Finch’s results were boosted by a gain of $2.9 million, or 21 cents per share, resulting from several items, including a reduction in bad customer debt and lease reserves, and a reversal of previously recorded tax reserves. Total other costs and expenses fell 7 percent to $75.3 million, while revenue fell to $1.02 billion from $1.03 billion.

Total company sales for the first quarter fell 1 percent to $1.022 billion from. $1.032 billion in the prior-year quarter. Excluding the impact of the sales decrease of $36 million attributable to South Bend, Ind.-based Martin’s Super Markets switching to Spartan Stores in mid-2007, total company sales increased 2.6 percent relative to last year.

The first quarter benefited from the shift of Easter to the first quarter in 2008 from the second quarter in 2007 and created a favorable sales variance in the first quarter of approximately $7.9 million, or 0.9 percent.

“I am very pleased with the continued momentum represented in our first quarter results,” said Alec Covington, Nash Finch’s president and c.e.o. “In particular, I am encouraged by the underlying growth that is evident in our top line sales after adjusting for the impact of the large customer transition which occurred last year. Even after deducting for the positive impact of an early Easter holiday, sales have improved nicely.”

Covington said the company’s efforts to reduce expenses bear out in its recent financial results.
Net earnings for the first quarter 2008 were $11.3 million, or $0.85 per diluted share, as compared to net earnings of $5.3 million, or $0.39 per diluted share, in the prior year quarter. Net earnings for the first quarter 2008 were favorably affected by several significant items totaling $2.9 million, or $0.21 per diluted share and are detailed in the table below.

“The improvement in results from our core food distribution segment is reflective of the actions taken last year to stabilize the operations, even after adjusting out the favorable items that we’ll likely not benefit from going forward,” said Covington. “In addition, I’m pleased that we’re starting to see some nice top line growth from new customer gains as well as growth among our existing customer base.”
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