Q1 Sales Gains Reflect Post-merger SpartanNash
SpartanNash Co. reported a surge of nearly 200 percent in consolidated net sales for the first quarter of the fiscal year compared to a year ago, mainly because the company is about twice as big since then.
Reflecting the merger of Spartan Stores with the Nash Finch Co., Q1 sales rose 199.1 percent to $2.3 billion, compared to $780.3 million in the year-ago period. That leap is chalked up chiefly due to $1.5 billion in sales as a result of last November's merger, plus same-store sales gains of 2.5 percent and new business gains in the food distribution segment. The merger similarly impacted operating earnings, which came in for Q1 at $27.6 million, versus $21.1 million for the prior year quarter.
“We are pleased to deliver a quarter of very strong earnings growth,” said Dennis Eidson, SpartanNash 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, 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.”
Performance By Segment
Net sales for the food distribution segment increased 188.4 percent to $971 million in the first quarter from $336.7 million for the first quarter last year. Q1 adjusted operating earnings for the distribution segment were $19.3 million, compared to $19.3 million in the same period last year.
Net sales for the retail segment increased 53 percent to $678.6 million from $443.6 million for the first quarter last year. Q1 adjusted operating earnings for the retail segment were $7.1 million, compared to adjusted operating earnings of $3 million in the same period last year. During the first quarter, the company completed three major remodels and store rebanners, 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.”
For fiscal 2014, the company is maintaining its previously issued guidance of consolidated net sales in the range of $7.9 billion to $8.04 billion. The company continues to expect capital expenditures for fiscal year 2014 to be in the range of $77 million to $82 million.
Grand Rapids, Mich.-based SpartanNash Co. distriutes food to military commissaries and exchanges, and independent and corporate-owned retail stores located in 44 states and the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. SpartanNash currently operates 169 supermarkets, primarily under the banners of Family Fare Supermarkets, D&W Fresh Markets, No Frills, Bag 'n Save, Sun Mart and Econofoods.