SpartanNash on Wednesday reported flat revenues in the fiscal second quarter as a decline in retail sales offset gains in its military and wholesaling divisions.
The Grand Rapids, Mich.-based company reported net earnings of $32.6 million on sales of $1.8 billion in the period, which ended July 16. Earnings were down by 11.4% primarily due to higher restructuring and asset impairment charges. Adjusted operating earnings improved $2.1 million to $39.3 million due to lower operating expenses resulting from productivity and efficiency initiatives as well as the benefit from increased sales, partially offset by higher health care costs and expenses related to the start-up of new business. EBITDA was $58.7 million, or 3.2% of net sales, compared to $58.5 million, or 3.3% of net sales in the prior year quarter.
"We are generally pleased with our execution in the second quarter and the progress we have made operationally and strategically, particularly our ability to grow sales in a challenging operating environment,” Dennis Eidson, SpartanNash's president and CEO, said in a statement. “New business growth and operational efficiencies helped mitigate the impact of deflation on our bottom line. We are also encouraged by our diverse pipeline of sales opportunities and remain on track to achieve our financial objectives for the year."
SpartanNash said sales in its distribution segment improved by 4.3% in the quarter to $820.3 million, primarily due to new business gains and growth of existing accounts. Military sales were up by 1.7% to $505.4 million on higher fresh sales, partially offset by lower sales at Defense Commissary Agency-operated commissaries.
Retail sales dipped by 2.8% to $501.8 million, driven by a 3% drop in comparable-store sales, excluding fuel. Retail comps reflected continued challenging economic conditions in select geographies, retail price deflation and competitive store openings, particularly in the company’s western region, SpartanNash said. Retail sales were impacted by $9.8 million in lower sales resulting from the closure of retail stores and fuel centers; and by $4.1 million due to lower retail fuel prices compared to the prior year; partially offset by contributions from stores acquired in the second quarter of last year.
SpartanNash maintained its full-year earnings outlook.
“With current market headwinds and economic conditions likely to persist, particularly in our western geographic areas, we remain focused on operating our business with a disciplined approach," Eidson said. "We will continue to implement our initiatives to enhance our merchandising, pricing and promotional strategies, including expanding our organic and private brand product offerings, improving our produce offering, and driving greater customer engagement through our loyalty program."
SpartanNash completed the transition of eight stores in the Omaha, Neb., region to the Family Fare banner early in the third quarter. It is also rolling out a new fresh private label, Open Acres.