Q2 Overall, Same-store Sales Slip at Nash Finch
Total second-quarter 2010 sales for the Nash Finch Co. were $1.15 billion, compared with $1.22 billion in the prior-year quarter, a decrease of 5.1 percent.
“Although the negative sales trend that manifested in the third quarter 2009 continued into the first half of 2010 in the food distribution and retail industry, our results reflect several major accomplishments, which include maintaining total company year-over-year EBITDA as a percentage of sales, reducing debt, investing in strategic initiatives and share repurchases, and controlling expenses and capital expenditures,” said Alec Covington, Nash Finch president and CEO. “We continue to have a solid balance sheet and have significant availability in our credit facility, which provides us flexibility to capitalize on attractive growth opportunities should they present themselves.”
Sales for the first 24 weeks of 2010 were $2.33 billion compared with $2.36 billion in the prior-year period, a decrease of 1 percent. Excluding the impact of the noncomparable sales increase of $59.4 million attributable to the acquisition of the three military distribution centers in January 2009 and the sales decrease attributable to the previously revealed transition of a portion of a food distribution customer buying group to another supplier, total company sales decreased by 3.8 percent in the second quarter and 2.8 percent year to date.
Retail same-store sales declined 4.3 percent as compared with the prior year quarter and 4.0 percent in the year-to-date comparison. The company has closed four retail stores since the beginning of the second quarter of 2009.
Consolidated EBITDA for the second quarter 2010 was $31.9 million, or 2.8 percent of sales, compared with $33.6 million (2.8 percent of sales), for the prior-year quarter. For the first 24 weeks of 2010, consolidated EBITDA was $60.5 million, (2.6 percent of sales), compared with $62.9 million (2.7 percent) in the prior-year period.
Net earnings for the second quarter 2010 were $10.7 million, or 81 cents per diluted share, as compared with net earnings of $9.5 million, or 72 cents per diluted share, in the prior-year period. Net earnings for the first 24 weeks of 2010 were $18.7 million, or $1.40 per diluted share, as compared with net earnings of $24.0 million, or $1.80 per diluted share, in the prior-year period.
The company recently said it would close its Bridgeport, Mich., distribution center. “The transition is proceeding smoothly, and we anticipate that the full transition will be completed by the end of the third quarter,” noted Covington.
Military segment sales in the second quarter decreased 1 percent, which Nash Finch attributed to weaker domestic sales, partially offset by an increase in overseas sales. Adjusting for impact of acquiring three distribution centers, military sales grew 0.5 percent year to date.
“Our military division continues to perform despite the tough economic times,” said Covington. “I am pleased with the significant increase in our military division EBITDA, which primarily resulted from the operating improvements implemented across the acquired distribution centers. We are on track to open our new Columbus, Ga., distribution center by the end of the third quarter, which will provide significant transportation savings and allow for long-term strategic growth opportunities.”
Further, the Nash Finch board of directors has approved a share repurchase program authorizing up to $25 million to purchase shares of the company’s common stock. The program took effect last Nov. 16 and will continue until Dec. 31.
Minneapolis-based Nash Finch Co. is the second-largest publicly traded wholesale food distributor in the United States. The company serves independent retailers and military commissaries in 36 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt.