Spartan Stores Is in Sweet Spot, Says C.E.O. at Annual Meeting

GRAND RAPIDS, Mich. -- A good fiscal 2005 shows that Spartan Stores is more than holding its own in the marketplace, said the wholesaler-retailer's leadership at its annual shareholders' meeting held here earlier this week.

Customers are responding favorably to improvements in corporately owned Family Fare and Glen's supermarkets, Spartan officials said. The company's overall performance in fiscal 2005 included solid sales and earnings, while all indications point to continued progress in the current year, according to Spartan officials.

Buoyed by increased private label sales, product realignment and aggressive cost-cutting initiatives, the company has found its market niche, in spite of mounting competition that includes supercenter rivals Meijer and Wal-Mart, said Spartan’s c.e.o., Craig C. Sturken.

"We have found our spot, and our performance in 2005 reflects the core ideas and strategies that have allowed us to become competitive, profitable, and respected in this new marketplace," Sturken said told shareholders. He emphasized the company's goal "to beat every other conventional retailer."

Spartan capped FY 2005 with over $2 billion in sales generated from its wholesale and retail divisions, as well as earnings for the year of $37.5 million. Same-store sales have produced "dramatic progress" from a negative balance, noted c.f.o. David Staples, adding, "We're pretty proud of what's been accomplished."

The company has also reduced total debt 68 percent since 2003.

The company added five new pharmacies to existing stores, two of which now feature drive-through service. But the big gainer in the store enhancement campaign, which helped boost grocery sales 5 percent to 8 percent, came about as a result of three fuel centers added to existing supermarkets, a move that Sturken called "an eye-opening experience. We've discovered why Kroger put in 600 gas stations over the last couple of years. It's going to be a requirement for any new store we build or buy."

Among other highlights, Spartan added 18 new distribution accounts that account for $35 million in annual sales. It has started adding voice-selection technology in its warehouses, which will eventually nullify paper orders and documentation by the close of Spartan's 2006 year.

Spartan plans to further upgrade its existing store stock, expand the private label lineup, and add to the store base with acquisitions and new locations. More stores will get pharmacies and fuel centers. Spartan will remodel 12 additional units and embark on one major expansion during fiscal 2006.

At the meeting, Elizabeth Nickels, e.v.p. and c.f.o. of Herman Miller Inc.; Kenneth Stevens, c.e.o. of Express, a division of Limited Brands, Inc.; and James Wright, president and c.e.o. of Tractor Supply Co., were re-elected to three-year terms on Spartan's board. Executive incentive and stock incentive plans also were approved.
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