SpartanNash Reports Q1 Sales Increase in 3 Business Segments

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SpartanNash Reports Q1 Sales Increase in 3 Business Segments

05/20/2019
SpartanNash Reports Q1 Sales Increase in 3 Business Segments

After sending a cautionary message that lowered profit guidance ahead of the results, grocery wholesaler/distributor SpartanNash officially released its 2019 Q1 results that saw net sales increase in all three of its operating segments. Consolidated net sales increased 6.6 percent to $2.54 billion compared to $2.39 billion for the same period last year. Much of the increase was due to the acquisition of Martin’s, as well as growth in the food distribution and military distribution segments. Gross profit for the first quarter of fiscal 2019 was $377.7 million, or 14.9 percent of net sales, compared to $343.2 million, or 14.4 percent of net sales, in the prior year quarter. 

“We are pleased with our team’s efforts to grow net sales across all three business segments, particularly in light of the challenging operating environment,” said David Staples, president and CEO. “While we are not satisfied with our bottom-line results for the quarter, our team remains committed to our fiscal 2019 objectives and long-term strategy, which we believe will support both future growth and profitability long-term.”

SpartanNash reported operating earnings of $22.2 million, compared to $25.7 million in the same quarter last year. Adjusted EBITDA was $54.7 million compared to $67.2 million for the same period in the prior year. The decline was attributed to lower food distribution and retail margin rates, higher supply chain costs and one-time expense associated with the Project One Team initiative.

Food Distribution

Net sales for food distribution increased $14 million, or 1.2 percent, to $1,169.2 million from $1,155.2 million in the prior year quarter. Excluding the impact of the elimination of intercompany sales to Martin’s subsequent to the acquisition, net sales increased 5.2 percent, primarily due to sales growth from existing customers.

Retail

Net sales for retail increased $135.6 million, or 23.9 percent, to $701.8 million from $566.2 million in the prior year quarter. Excluding the acquisition of Martin’s, sales decreased 3 percent, due to lower sales resulting from store closures of $12.4 million and a decrease in fuel prices per gallon. Retail comparable store sales were -0.3 percent in the first quarter.

Military Distribution

Net sales for military distribution increased $7.7 million, or 1.2 percent, to $671.3 million from $663.6 million in the prior year quarter. The increase was primarily due to incremental volume from new business with an existing customer that commenced late in the fourth quarter of 2018 and DeCA’s private brand program, partially offset by lower comparable sales at DeCA operated locations.

SpartanNash’s core businesses consist of distributing grocery products to independent and chain retailers, corporate-owned retail stores, and U.S. military commissaries and exchanges, as well as fresh produce distribution and fresh-food processing. The company serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt.

Grand Rapids, Mich.-based SpartanNash also operates 158 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. Through its MDV military division, the company is a leading distributor of grocery products to U.S. military commissaries. SpartanNash is No. 33 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States.