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Spartan Mulls Over Growth of Valu Land Banner

“We do have an appetite to grow outside Michigan, which can manifest itself in a number of different ways, and Valu Land would be one of them.” — Dennis Eidson, chairman and CEO, Spartan

GRAND RAPIDS, Mich. — Spartan Stores here said last week it contemplates expanding its Valu Land price-impact format outside the state of Michigan, which would be its first corporate stores outside its home state.

“We do have an appetite to grow outside Michigan, which can manifest itself in a number of different ways, and Valu Land would be one of them,” Dennis Eidson, chairman and chief executive officer, said during a conference call with analysts to discuss financial results for the second quarter, which ended Sept. 15.

He also said Spartan hopes to add more distribution volume outside the state of Michigan, which could entail opening an out-of-state distribution center.

Spartan services approximately 375 independent customers in Michigan, Ohio and Indiana; however, all 96 of its corporate stores are located in Michigan.

It opened the first three Valu Land locations in 2011 in three smaller cities — Marion, Leslie and Clare, in north-central Michigan — and a fourth store earlier this year in Lansing, the only store that was not a conversion from another banner.

Eidson said the company plans to open three more Valu Land stores before the end of its fiscal year in March in Warren, Roseville and Dearborn — all in the metropolitan Detroit area, “which has a larger population base in the surrounding prime trade area” than the other stores.

'Organic Growth Opportunities'

Two of those three stores will open within the next 45 days, he said, “and we believe Valu Land will provide organic growth opportunities both inside and outside the state of Michigan.

“You should expect a more aggressive store count in the next fiscal year than we had this year, and the same through the following fiscal year. We think we can ramp it up pretty quickly because these stores are pretty easy to open, and we should see our pace quicken as you look ahead.”

Read more: Spartan Tests Discount Format

For the second quarter, net income rose 0.5% to $10.3 million — including an after-tax asset impairment charge of $200,000 and an after-tax benefit from asset sales of $400,000 — and sales increased 0.3% to $621.6 million. For the first half net income rose 0.1% to $16.3 million and sales were up 0.3% to $1.2 billion.

Sales in Spartan’s retail segment fell 0.3% to $362.3 million during the 12-week quarter, while comparable-store sales, excluding fuel, dropped 1%. For the first half retail sales fell 0.1% to $707.9 million. In the distribution segment, sales rose 1.2% to $259.2 million for the quarter and 0.8% to $517.6 million for the half.

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