SpartanNash Posts 15th Straight Quarter of Sales Growth
Last year's acquisition of Martin's Super Markets gave SpartanNash a boost in the fourth quarter, helping the company achieve its 15th consecutive quarter of sales growth.
For the fourth quarter ended Dec. 28, SpartanNash had net sales growth of 5.3% to $2 billion from $1.90 billion in the prior year quarter. Retail same-store sales increased 0.5%, the company's second consecutive quarter of positive comps.
"We are pleased with the progress that was made in the last quarter," said Dennis Eidson, interim president and CEO. "By focusing on execution, we were able to deliver positive retail comparable store sales for the second consecutive quarter, reduce working capital and increase our free cash flow, while making improvements in our supply chain operations. As a result, we were able to deliver results consistent with the guidance we provided following the third quarter and are optimistic about our future outlook."
Gross profit for the fourth quarter was $286.7 million, or 14.4% of net sales, compared to $245.4 million, or 12.9% of net sales, in the prior year quarter. The growth in gross profit and improvement as a percent of net sales was primarily driven by the acquisition of Martin's and the resulting higher mix of retail sales.
Adjusted earnings from continuing operations for the fourth quarter were $8.3 million, or 23 cents per diluted share, and include $3.9 million after tax, or 11 cents per diluted share, in transition costs. Adjusted earnings from continuing operations for the prior year quarter were $11.4 million, or 32 cents per diluted share.
Segment Financial Results
Food Distribution
Net sales for food distribution at SpartanNash decreased $15.4 million, or 1.6%, to $938.9 million from $954.4 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin's, net sales increased 2.5%, primarily due to sales growth with existing customers.
Retail
Net sales for retail increased $118.9 million, or 27.7%, to $548.0 million from $429.1 million in the prior year quarter primarily due to the acquisition of Martin's.
Military Distribution
Net sales for military distribution decreased $2.3 million, or 0.5%, to $511.0 million from $513.3 million in the prior year quarter. The decrease was due to lower same-store sales at Defense Commissary Agency ("DeCA")-operated locations partially offset by the continued expansion of DeCA's private brand program.
Consolidated net sales for fiscal 2019 ended Dec. 28 increased $471.5 million, or 5.8%, to $8.54 billion from $8.06 billion in the prior fiscal year. The increase in net sales was generated through the acquisition of Martin's, as well as higher sales within the food distribution segment prior to the elimination of the intercompany sales for the acquired business.
The company reported earnings from continuing operations for fiscal 2019 of $5.9 million, or 16 cents per diluted share, compared to $33.8 million, or 94 cents per diluted share, in the prior year. The decrease was primarily related to pension termination expenses, an increase in supply chain costs, and higher administrative expenses, including transition costs.
For the 53-week fiscal year ending Jan. 2, the company anticipates low-single digit percentage sales growth.
In its fiscal report, the company said its board of directors is undertaking a comprehensive process to identify the company's next CEO and made progress in the search over the last quarter.
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. The Grand Rapids, Mich.-based company serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt, and operates 160 supermarkets, mainly under the Family Fare Supermarkets, Martin’s Super Markets, D&W Fresh Market, VG's Grocery, Dan’s Supermarket and Family Fresh Market banners. The company is No. 33 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States.
