SpartanNash Faced 'Headwinds' in Q2, Leading to Lower Sales

In new quarterly report, Michigan-based retailer also boosts the low end of its profitability outlook for FY 2021
Lynn Petrak
Senior Editor
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SpartanNash reported its retail comparable store sales were up from Q2 2019 but down from COVID-hit 2020.

SpartanNash, which contends with a host of market factors as a company that operates its own grocery stores, serves U.S. military commissaries and exchanges and distributes grocery products to independent and chain retailers, released Q2 results that reflect the dynamics of the times and its businesses.

For the 12-week period ending July 17, net sales at SpartanNash dipped 3.6%, or $2.11 billion, from the second quarter of 2020 when COVID-fueled sales reached $2.18 billion.

In its retail business, SpartanNash reported an increase of 12.2% in retail comparable store sales from the pre-pandemic second quarter of 2019 but a slide of 2.7% compared to 2020’s second quarter. Net sales for retail were down 1.8%, or $11.3 million, to $620 million, from $631.3 million in the second quarter of 2020.

The pandemic continues to impact SpartanNash’s military business, which posted a decrease in net sales of 1.7%, or $32.9 million, for the quarter. The reduction was attributed to lower volumes at domestic commissaries caused by limited base access.

Meanwhile, net sales at the company’s food distribution business also came in lower in second quarter, declining 3.1%, or $33.3 million, to $1.06 billion from $1.09 billion in the prior year quarter. On a two-year basis, though, net sales rose 13%, or $121.1 million, from Q2 2019.

Given the challenging variables of the operating environment, the company’s leadership assessed the latest quarter in a positive way. "I am pleased to report strong second quarter results, in spite of continued labor and supply chain headwinds that have been observed throughout the industry," said SpartanNash President and CEO Tony Sarsam. "Our associates again rose to the challenge to best support both our wholesale customers and communities we serve."

In its Q2 report, SpartanNash also shifted expectations for the rest of its fiscal 2021 year. The company increased the low end of its profitability outlook range: EPS is now expected to range from $1.56 to $1.69 per diluted share, with adjusted EPS expected to range from $1.70 to $1.80 per diluted share, and adjusted EBITDA to range from $200 to $210 million.

“Our updated outlook reflects the improved trends in retail, but also recognizes the headwinds related to sales trends in our military business and strains on our supply chain that have been significantly impacted by historic labor shortages," Sarsam remarked.

Also looking ahead, Sarsam underscored the potential impact of improvements in its supply chain management. "Following the recent announcement of our supply chain transformation initiative, our team has completed the blueprint phase and begun work in areas that will best position us for sustainable, profitable growth and will enhance shareholder returns," he added.

SpartanNash’s core businesses include distributing grocery products to independent and chain retailers, its corporate-owned retail stores, and U.S. military commissaries and exchanges, as well as fresh produce distribution and fresh food processing. No. 39 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America, the company serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar and Djibouti. SpartanNash also operates more than 150 supermarkets, mainly under the banners of Family Fare, Martin’s Super Markets, D&W Fresh Market, VG’s Grocery, and Dan’s Supermarket. 

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