Smart & Final Net Sales, Comps Suffer in Q4

Smart & Final Stores posted flat net sales and a decline in comps during its fourth quarter of fiscal 2016. The Commerce, Calif.-based retailer cited grocery price deflation and comparable-store sales cannibalization as the key reasons behind the performance.

Compared to the year-ago period, Smart & Final's Q4 2016, which ended Jan. 1, generated a 0.3 percent increase in net sales, reaching roughly $1 billion. This was driven by the sales contribution of new stores, and partially offset by the decrease of 2 percent in comps, which comprised a 0.2 percent increase in comparable transaction count and a 2.2 percent decline in comparable average transaction size.

“The comparable store sales rate decline primarily reflects the ongoing impacts of deflation and sales cannibalization that we experienced during the quarter,” said Richard Phegley, SVP and CFO.

Adjusted net income was $5 million, compared to $14.7 million for the same period a year prior.

For the full year, net sales grew 9.3 percent to reach $4.3 billion. The increase was driven by the net sales contribution of new stores, and partially offset by a 0.5 percent decline in comps, which comprised a 0.8 percent increase in comparable transaction count and a 1.3 percent decrease in comparable average transaction size.

During fiscal 2016, Smart & Final opened 33 new Smart & Final Extra stores, completed six conversions of legacy Smart & Final stores to the new Extra format, and relocated six legacy stores while closing eight others. It also opened four new Cash & Carry locations during the period, with a total of 305 stores – 172 Extra stores, 74 legacy stores and 59 Cash & Carry stores – operating as of Jan. 1.

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