Mixed Bag for SpartanNash in Q3

Although it saw growth in net sales during the period, SpartanNash's performance across distribution, military and wholesale operations varied in its third quarter of fiscal 2017.

For the Grand Rapids, Mich.-based retailer-wholesaler, consolidated net sales for Q3 increased $106.6 million, or 5.9 percent, to $1.9 billion, compared with $1.8 billion in the prior-year quarter. Growth was driven by contributions from the Caito Foods Service acquisition, organic growth of 5.2 percent in food distribution, and significantly improved sales trends in the military commissary business, partially offset by lower sales at retail.

Examining individual segments, however, revealed highs and lows. Net sales for the food distribution segment grew $132.9 million, or 16.5 percent, to $937.4 million, compared with $804.5 million in the prior-year quarter, primarily due to contributions from the Caito acquisition and organic sales growth from existing customers.

The military and retail segments showed different results, however. The military segment's net sales were essentially flat at $505.6 million, compared with $506.6 million in the prior year's Q3. Sequentially, net sales for the military division grew 7.3 percent from Q2 of 2017, with new commissary business in the southwest United States, combined with incremental volume from the private label program, offsetting lower comparable sales at Defense Commissary Agency-operated locations.

The retail segment saw a drop in net sales, though, to $463.6 million in Q3, from $489 million during the same period a year prior. The decrease was primarily attributable to $16.7 million in lower sales resulting from the closure and sale of retail stores, and a 2.5 percent decrease in comparable-store sales, excluding fuel, partially offset by higher fuel prices compared with the prior year.

During Q3, as part of its store rationalization plan, SpartanNash closed three retail stores and sold one retail store to a new food distribution customer, ending the quarter with 147 corporate-owned retail stores, compared with 159 stores in the same quarter the prior year. Early in Q4, it closed one retail store in connection with its store rationalization plan and sold another to an existing food distribution customer.