GRAND RAPIDS, Mich. — A soft economy, falling prices, competitive openings and even bad weather contributed to quarterly declines in earnings and comparable-store sales at Spartan Stores here, the company said last week.
Net earnings of $10.4 million fell by 2% as consolidated sales slipped 3% to $610.2 million for the fiscal second quarter, which ended Sept. 12, Spartan said. Comparable retail store sales plummeted by 5.1%, however, due mainly to new competitors and product price deflation, along with the effects of a shift toward private-label items and unseasonably cool weather in northern Michigan, which hurt tourist business at Spartan's stores there.
Earnings of 46 cents per share were in line with analyst estimates.
Dennis Eidson, Spartan's president and chief executive officer, said he was pleased that the company was maintaining profits and EBITDA in spite of the recession, which has hit especially hard in Michigan.
However, he said the company is prepared for those trends to continue at least for another few quarters as unemployment in excess of 15% in Michigan has eroded consumer confidence.
“I think it's not only the unemployment; it is the confidence that the consumer has or, in this case, doesn't have,” Eidson said in a conference call discussing results. “I think consumers still aren't sure that the worst is behind them. … Until we get employment going in the right direction and some confidence back for the consumer, I think we're going to live in this [sales] range for a bit.”
Spartan said sales fell to $250 million in its distribution segment, mainly due to the acquisition of VG's stores, a former customer. The VG's addition helped boost overall retail sales by 11.3% to $360.2 million.
Eidson said an especially soft economy in VG's Flint area would mean the benefits of the acquisition would take longer to realize.
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