Retail Segment Drives Q3 Sales Boost at SpartanNash

A healthy retail segment helped boost third-quarter net sales for SpartanNash, which saw growth of 6% for the 12 weeks ending Oct. 5.

Overall, net sales rose to $2 billion from $1.89 billion for the Midwestern grocery operator, with comparable store sales up a scant 0.1%. 

The company credited the net sales increase to incremental volume resulting from the acquisition of Martin’s Super Markets, which was completed Dec. 31, 2018, as well as higher sales within the food distribution segment, prior to the elimination of the intercompany sales for the acquired business.

“We are encouraged to have delivered third-quarter profitability and sales growth in line with the guidance we provided in August,” said Dennis Eidson, interim president and CEO since August when David Staples resigned. “Our results were driven by a solid increase in net sales, representing our 14th consecutive quarter of growth, and we are pleased with the return to positive retail comparable store sales. Our team is focused on driving improvements in operational execution and positioning the company to realize profitable growth as we deliver value to our shareholders.”

Q2 results had been overshadowed by SpartanNash's decision to exit its Fresh Kitchen business by the close of the fiscal year. In Q3, operating earnings were $15.8 million compared to $26.8 million in the prior year quarter. The decrease was primarily attributable to higher administrative expenses and supply chain costs, partially offset by incremental earnings from the newly acquired Martin’s business and growth in the food distribution segment. Adjusted operating earnings were $20.3 million compared to $27.8 million in the prior year and were adjusted for Fresh Kitchen operating losses.

Gross profit for the Q3 of fiscal 2019 was $290.4 million, or 14.5% of net sales, compared to $256.1 million, or 13.6% of net sales, in the prior year quarter, while reported operating expenses for Q3 were $274.6 million, or 13.7% of net sales, compared to $229.3 million, or 12.2% of net sales, in the prior year quarter.

SpartanNash reported sales by segment as follows:

• Food Distribution: net sales decreased $1.2 million, or 0.1%, to $939.0 million from $940.2 million in the prior year quarter.
• Military Distribution: Net sales decreased $1.0 million, or 0.2%, to $499.2 million from $500.2 million in the prior year quarter.
• Retail: Net sales increased $115.3 million, or 25.8%, to $561.6 million from $446.3 million in the prior year 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.