SpartanNash touted its supply chain efficiencies in its first quarter financial report.
Ahead of a pivotal shareholder meeting, SpartanNash released its first quarter financial report. For the period ending April 23, the Michigan food solutions company reported a 4% increase in net sales to reach $2.76 billion and a slight dip in net earnings compared to the prior year’s quarter, from $19.5 million to $19.3 million. Those earnings were ahead of Wall Street expectations.
Gross profits hit $450.6 million, or 16.3% of net sales, versus a rate of 15.7% of net sales in first quarter of 2021. Comps were up at the company’s food retailing business, with a 7.2% lift in same-store sales during the first quarter, which was also a time of spiking inflation. Adjusted EBITDA rose 18.2% over April 2021 to reach $76.6 million, a record for the first quarter.
Expenses as a rate of sales came in higher for the quarter, attributed to rising labor costs, near-record fuel prices and greater incentive compensation, among other factors. SpartanNash reported that labor costs within its food distribution and military segments were partially offset by supply chain efficiencies.
On that note, the food solutions company underscored its accomplishments during the quarter, highlighting progress on its supply chain transformation. “Our team’s keen focus on operational excellence helped deliver on our supply chain transformation initiative,” remarked Tony Sarsam, president and CEO. “During the quarter, we achieved more than $15 million in run-rate cost savings, already meeting our full-year 2022 run-rate goal of $15 million to $30 million annualized supply chain savings. Because we achieved this significant milestone ahead of schedule, we are now updating our commitment to an annualized savings range of $25 million to $35 million by year-end. In addition, our full-year outlook and long-term financial targets show a clear path for growth for the next several years.”
Sarsam highlighted such growth as the company faces a challenge from two investor groups that together hold a 4.5% stake in the business. Those firms,Macellum Advisors GP, LLC and Ancora Holdings Groups, LLC, are recommending changes to SpartanNash's board of directors and nominating two of their own prospective members.
The investor groups and SpartanNash have sent out respective letters to shareholders and issued statements ahead of the June 9 annual meeting, which will be held virtually. Earlier this week, SpartanNash shared the recommendation of independent proxy advisory firm Glass Lewis & Co. to vote for all of the company’s director nominees, and rebutted the recommendation of another advisory firm, International Shareholder Services Inc., to vote for Marcellum and Acora’s nominees.
“The SpartanNash board has a proven track record of taking decisive, meaningful actions to transform the company, and our preliminary first quarter financial results and raised fiscal year 2022 guidance demonstrate that our strategy is working. Further, the company’s new long-term financial targets show a clear path for growth and continued momentum for the next several years,” SpartanNash declared in a statement.
Meanwhile, looking ahead for the rest of 2022, SpartanNash reiterated the fiscal year guidance it shared in May, anticipating net sales to land between $9 billion and $9.3 billion. That’s a bump from the earlier guidance of $8.9 billion to $9.1 billion. On a longer-term basis, the company provided financial targets for 2025, including the intent to improve net sales to more than $10 billion and boost adjusted EBITDA by 40 percent.
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. 41 on The PG 100, Progressive Grocer’s 2022 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 also operates 145 supermarkets and employs 17,500 associates.