SPARTAN STORES REPORTS SALES, EARNINGS INCREASES

GRAND RAPIDS, Mich. -- Increased quarterly sales and earnings, including a profit in the retail division, are encouraging signs of a turnaround at Spartan Stores here, company officials said.8 cents a share improved from a 31-cent-per-share loss a year ago.Sales of $213.5 million in Spartan's retail division, an increase of 0.6% over year-ago results, were driven by improved category management practices,

GRAND RAPIDS, Mich. -- Increased quarterly sales and earnings, including a profit in the retail division, are encouraging signs of a turnaround at Spartan Stores here, company officials said.

8 cents a share improved from a 31-cent-per-share loss a year ago.

Sales of $213.5 million in Spartan's retail division, an increase of 0.6% over year-ago results, were driven by improved category management practices, reduced costs, and better performance in higher-margin categories, Craig Sturken, chief executive officer, said in a conference call discussing quarterly results. The retail division at Spartan turned a profit of $100,000 during the quarter, the company said. Comparable-store sales increased by 1%.

"We have a nice comp-growth rate. It's not spectacular, but it's solid, and it's something we think we can maintain," Sturken said. "We are seeing nice margin improvement, primarily because category management allows us to attack the cost of goods. Our margin improvements are not coming because we're reducing our investment in promotions but because we've gotten better on the cost-of-goods side, which is the best way to improve margins."

Improved marketing strategies helped Spartan drive better results out of the perishable departments, Sturken added. The company also gained market share in northern Michigan as a result of store closures by independent competitor Carter's.

"We are seeing a nice increase in perishable business, particularly in meat," he said. "Overall, the perishable category as a collection is doing very well."

Distribution sales increased 4.2% to $260.8 million. "Wholesale has been very robust," Sturken said.

"We're looking at nice increases in market share and total sales overall."

1ST-QUARTER RESULTS

Qtr Ended: 6/19/04; 6/21/03

Sales: $474.3 million; $462.6 million

Change: +2.5%

Comp-store: +1%

Net Income: $1.6 million; ($6.1 million)*

Change: N/A

Inc/Share: 8 cents; (31 cents)

* Year-ago net income included a $2 million charge for severance payments and a loss of $3 million from discontinued operations, compared with a loss of $100,000 from discontinued operations in the more recent period.