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SpartanNash Launching Supply Chain Transformation

Q1 report also details sales declines, private label strength
Gina Acosta, Progressive Grocer
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SpartanNash is launching a transformation initiative focused on supply chain, including transportation.

SpartanNash is planning to launch a supply chain improvement initiative in the second quarter as the company continues to lap pandemic sales gains.

In a first quarter earnings call, CEO Tony Sarsam said the initiative will be focused on executing sustained improvements to supply chain operations across the company's network.

"We're just on the brink of making some of those investments," he said. "They are primarily around process. There will be some investments in IT upgrades, but a lot of the emphasis is going to be on strengthening our process and the way we go about that work. It will cover transportation, it will cover the way we think about our network, it will cover the way we think about inventory and we're creating a sales and operations planning process that's strengthening the way we manage our warehouses overall and thinking about how we make our warehouse labor more efficient and more effective in that space."

Sarsam said the effort will "be a multi-year endeavor, but it's absolutely critical to what we do to having a strong business as being both efficient and effective in our overall supply chain."

For the first quarter ended April 24, SpartanNash had net sales of $2.66 billion, which declined 7% from the prior year quarter net sales of $2.86 billion, due to the prior year's increased consumer demand related to the COVID-19 pandemic. Retail comparable store sales declined 7% for the quarter. Comparable store sales increased by 9.3% on a two-year basis, representing a continuation of the trend experienced through the end of fiscal 2020.

EPS was 54 cents per share and adjusted EPS was 56 cents per share. Adjusted EBITDA was $64.8 million, compared to $74 million in the prior year quarter.

During the first quarter the company announced key additions to the leadership team, including Jason Monaco as EVP and CFO; Masiar Tayebi as EVP and chief strategy officer; and David Petko as SVP and chief supply chain officer.

The company reaffirmed its full year total company fiscal 2021 outlook, initially provided on Feb. 24. EPS is expected to range from $1.48 to $1.67 per diluted share, with adjusted EPS ranging from $1.65 to $1.80 per diluted share, and adjusted EBITDA ranging from $195 to $210 million. 

"While this was a transitional quarter for SpartanNash, our overall profitability was consistent with our expectations to start the year," Sarsam added. "We made meaningful progress against our key initiatives for 2021, including improvements in gross margin, service levels, our OwnBrands offering and associate safety and retention. Our recent and planned investments in our supply chain processes and leadership team will drive future efficiency, support our growth and enhance our People First culture."

Sarsam said there is growing consumer excitement for the company's own brands and "we look forward to expanding these offerings throughout our retail footprint and among our independent customers."

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 Grand Rapids, Mich.-based 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 operates over 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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