Spartan Stores Inc. enjoyed a 4.9 percent boost in consolidated net sales for the fourth quarter of its 2013 fiscal year, which ended with sales up just shy of 1 percent overall.
“We are pleased to report that our business generated comparable store sales growth and achieved better than expected earnings for the fourth quarter,” said Dennis Eidson, Spartan’s president and CEO. “These encouraging results reflect improvement across both our distribution and retail segments as we gained new customers, continued to refine our promotional and loyalty programs and benefitted from the early Easter holiday. We believe that our value proposition in both segments continued to resonate with customers. We will continue to build on this customer-centric platform in fiscal 2014 as we deepen our customer relationships and improve our long-term performance.”
Consolidated net sales for the 12-week fourth quarter increased 4.9 percent to $592.8 million compared to $565 million last year, excluding net sales in the 53rd week of fiscal 2012, due to increases in both the distribution and retail segments. Adjusted EBITDA for the quarter increased 16 percent to $29.6 million, or 5 percent of net sales, compared to $25.6 million, or 4.5 percent of net sales, excluding the estimated impact of the 53rd week last year. Adjusted earnings from continuing operations increased $1.3 million, or 8 cents per diluted share, to $10.4 million, or 48 cents per diluted share, compared to $9.1 million, or 40 cents per diluted share, last year.
Net sales for the distribution segment increased 3.4 percent to $256.9 million in Q4 from $248.5 million in the same period last year if $23.1 million in net sales attributable to the extra week of sales in last year’s fourth quarter are excluded.
Net sales for the retail segment increased 6.1 percent to $335.9 million compared to $316.4 million in the same period last year, if $26.7 million of net sales attributable to the extra week are excluded. The increase in sales was due to incremental sales from the previously disclosed acquisition of a grocery store in the third quarter, increased fuel sales and positive comparable store sales.
Comparable store sales, excluding fuel, increased 0.4 percent, which reflect a benefit over the prior year from the calendar shift of the Easter holiday selling week into the fourth quarter, which offset the negative impact on pharmacy sales from the continued shift in sales mix to generic medications. During the fourth quarter, the company opened one Valu Land store, ending fiscal 2013 with 101 corporate owned stores and 30 fuel centers.
For the 52-week fiscal 2013 full year, consolidated net sales increased 0.9 percent to $2.61 billion compared to $2.58 billion for the fiscal 2012 full year, excluding $49.8 million in net sales from the 53rd week of fiscal 2012. Comparable store sales, excluding fuel, decreased 0.5 percent in fiscal 2013 due to the lower levels of inflation and the significant impact of the conversion from branded to generic drugs in the company’s pharmacy operations.
Adjusted EBITDA for fiscal 2013 was $106.3 million, or 4.1 percent of net sales, compared to $107.2 million, or 4.1 percent of net sales last year excluding the estimated impact of the 53rd week last year. Fiscal 2013 adjusted earnings from continuing operations were $31.2 million, or $1.43 per diluted share, excluding net after-tax charges of $3.3 million primarily related to debt extinguishment and asset impairment charges.
“The Michigan economy is likely to continue its gradual recovery in fiscal year 2014 and we believe that Spartan Stores is well-positioned to benefit from the continued modest economic improvements due to our investments in the retail and distribution segments and our continued effort to increase the value provided to our customers," Eidson said. "We will remain focused on balancing the key fundamentals of driving sales and managing expenses as we invest in the consumer experience, as well as increasingly use the data from our loyalty programs to engage the consumer and reward them for shopping our stores. From a capital perspective, we plan to re-banner up to 13 Glen’s locations to the Family Fare brand and complete up to 12 minor remodels and an additional three major remodels. We also plan to open one to three new Valu Land stores in fiscal 2014.”
For the first quarter of fiscal 2014, the company anticipates that consolidated net sales will slightly exceed last year as it continues to benefit from the acquisition of a retail store, maturation of the Yes Rewards loyalty program and new customer gains.
Grand Rapids, Mich.-based Spartan Stores Inc. distributes more than 40,000 private and national brand products to 390 independent grocery locations in Michigan, Indiana and Ohio, and to 101 corporate-owned stores located in Michigan, including Family Fare Supermarkets, Glen's Markets, D&W Fresh Markets, VG's Food and Pharmacy, and Valu Land.