Nash Finch Sales Up 9% in Q2
Total company sales at Minneapolis-based Nash Finch Co. were up 9.1 percent for the second quarter of its 2013 fiscal year ending June 15, coming in at $1.2 billion, compared to $1.1 for the same period a year ago.
The food distributor and military commissary supplier reported very rosy financials in the wake of the announcement that it would be merging with Michigan-based Spartan Stores Inc.
"We are pleased to report strong sales growth across all three of our business segments in the second quarter. The strategic investments made last year are now becoming evident in our top-line,” said Alec Covington, Nash Finch president and CEO. “Consolidated EBITDA came in relatively flat as expected compared to the prior year. We will continue to see pressure on the military segment gross margin until the fourth quarter when we cycle the reductions made to contractual margin rates.”
The acquisition of 12 Bag ‘N Save and 18 No Frills stores last year contributed to a net increase in total company sales of $23.1 million, including a $50.9 million increase in retail segment sales partially offset by a $27.8 million decrease in distribution segment sales that are now reported in the retail segment. Q2 adjusted net earnings were $8.4 million or 64 cents per diluted share compared to $9 million or 69 cents for the year-ago period.
Military segment net sales in Q2 increased 2.2 percent to $537.5 million compared to the prior year. “The military management team has worked diligently to attract new business to utilize our world-wide military distribution network," Covington said, "and we look forward to the addition of perishable and frozen capacity in our new Landover facility early next year, which is the final milestone in the completion of our worldwide network."
Combined Food Distribution and Retail segment sales increased 15.4 percent to $667.3 million in Q2 as compared to the prior year period. “The increases were driven by the addition of new Food Distribution customers as well as in Retail due to the Omaha store acquisitions last year,” Covington said. “We recently realigned the Food Distribution organizational structure to place more focus on sales, new business development and customer service. We are already beginning to see the benefits of this change.”
On July 22, Nash Finch announced that it had entered into an all-stock merger agreement with Spartan Stores valued at approximately $1.3 billion. The agreement was unanimously approved by Nash Finch's board of directors and is expected to close by the end of the year. Each share of Nash Finch common stock will be converted into 1.2 shares of Spartan’s common stock. Spartan shareholders will own approximately 57.7 percent of the equity of the combined company and Nash Finch shareholders will own 42.3 percent.
Nash-Finch's core businesses include distributing food to military commissaries and retailers located in 44 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. The Company also owns and operates a base of retail stores, primarily supermarkets under the Family Fresh Market, Econofoods, Family Thrift Center, No Frills, Bag 'n Save, Avanza and Sun Mart trade names.