SpartanNash Reports Softer Sales in Q2
Still in the midst of an organizational transformation, SpartanNash is balancing the quest for growth and change with continued economic headwinds. The Michigan-based food solutions company has revealed its second-quarter results, some of which reflect the bumpiness of the market.
According to the Q2 report, net sales dipped 3.5%, a decline attributed to lower volumes across both the company’s retail and wholesale businesses. Retail sales dipped slightly, by 0.4%, to $676.1 million, and comps decreased by 2.5% in the 12-week period. Sales in the wholesale segment went down by 4.8% to $1.55 billion, a slide also driven by reduced volumes.
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On the plus side, SpartanNash reported that cash from its operating activities spiked by 166%, mainly due to ongoing working capital management initiatives. Net long-term debt also improved.
President and CEO Tony Sarsam put the performance into perspective, based on progress toward the company's business enhancements. "The team's execution of our transformational initiatives has created a foundation for future growth while contributing to our margin gains year to date," he noted. "We are pleased with the progression of our investments in margin-enhancing programs and expect benefits by the end of the year."
During the earnings webcast, Sarsam addressed shopper behaviors tied to ongoing macroeconomic conditions. “According to our own research, more than 50% of shoppers are seeking sales, and notably 63% of lower-income households are concerned [about inflation]. These are the market headwinds we are facing,” he said, adding, “We are focused on what we can control and not standing still in this environment.”
To that end, Sarsam emphasized three key pillars of SpartanNash's transformation: enhanced category planning; the company’s own brands, including Our Family and the new Finest Reserve line; and the customer value proposition that encompasses store modernization.
On that topic, SpartanNash is investing in store enhancements, as evidenced by the recent refresh of a location in Holland, Mich., near the company’s corporate offices. Updates are in progress at other company-owned locations, too.
Looking ahead, SpartanNash reaffirmed its outlook for the rest of FY2024. Total net sales are projected to land between $9.5 billion and $9.7 billion.
Further, M&A activity is poised to provide a business boost. “The newly acquired Metcalfe's Market business is expected to add $100 million revenue,” noted Sarsam. Additionally, SpartanNash's military arm is likely to continue its strong performance.
With its 17,000 associates, Grand Rapids, Mich. based SpartanNash operates two complementary business segments: food wholesale and grocery retail. Its global supply chain network serves wholesale customers that include independent and chain grocers, national retail brands, e-commerce platforms, and U.S. military commissaries and exchanges. On the retail side, SpartanNash operates 147 brick-and-mortar grocery stores, primarily under the banners of Family Fare, Martin's Super Markets, and D&W Fresh Market, in addition to dozens of pharmacies and fuel centers. The company is No. 45 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. SpartanNash is also among PG’s 2024 10 Most Sustainable Grocers.
