MINNEAPOLIS -- Nash Finch here last week said sales gains in its distribution segment and improvements in its retail store base drove a surge in profits in the first quarter.
In a conference call discussing results for the 12 weeks ended March 26, the company said it expected its recently acquired warehouses in Indiana and Ohio would be integrated relatively seamlessly.
"There's nothing that's particularly heavy lifting here -- there's just a lot of it," said Ron Marshall, chairman and chief executive officer. "We tend to be very organized and disciplined about these things, and I'm really comfortable that this thing's going to move forward gracefully."
On March 31, Nash Finch completed the acquisition of the distribution centers in Lima, Ohio, and Westville, Ind., from Roundy's, Milwaukee, for about $225 million.
Marshall said the first phase of the back-office integration of the distribution centers has already been completed, and the replacement of Roundy's private-label product with Nash Finch's Our Family brand has begun.
Nash Finch said it expected operating profits to improve by $31 million to $33 million during the first 12 months following the acquisition, net of implementation costs of about $3 million. Marshall said the company could not yet project the impact on earnings per share because the goodwill value of the acquisition had not yet been calculated.
Marshall also said the company remained open to further acquisition opportunities, predicting that the current field of 50 to 60 full-line grocery wholesalers would be eventually winnowed down to about a dozen through consolidation.
In the first quarter, Nash Finch said its net income was up 49%, to $7 million, on a 2.7% increase in sales, to $882.2 million, vs. year-ago results. Gains in wholesale and military supply more than offset retail sales declines, the company said.
After closing 22 retail locations last year, profits in the retail division doubled, to $5.6 million, compared with $2.8 million in the year-ago period. Sales were down 13.5%, to $168.3 million. Same-store sales were down 0.6% -- an improvement over the double-digit declines the company's stores had been experiencing. Nash Finch attributed the improvement to more effective promotions, the closure of underperforming stores, and the early Easter holiday this year.
Distribution profits rose 7.6%, to $15.6 million, on a 4.5% increase in sales, to $450.4 million, which the company attributed to same-store sales gains by customers and to newly acquired accounts.