GRAND RAPIDS, Mich. — Spartan Stores here last week said it saw sales gains in both its distribution and retail segments in the fiscal first quarter, although profits were basically flat.
The company expressed optimism that it would continue to drive sales growth in a difficult economic environment through the rollout of its new loyalty card, private-brand enhancements, fuel centers and other initiatives.
“We are excited about our loyalty program, which is scheduled to roll out in the second half of the fiscal year,” said Dennis Eidson, president and chief executive officer, in a conference call with analysts. “This program will provide an array of values for consumers [and] in return we will have a better connection to the consumer than ever before.”
The company began testing the “yes card” loyalty program at its Glen's division in 2009 and is now rolling it out across its corporate banners.
In addition, Spartan said it is continuing to enhance its private-label offering, with new products in the pet category, for example. It also is enhancing the packaging on its private brands and including more nutrition information.
“During the second quarter, we will begin to roll out packaging that emphasizes key nutritional information in an easy-to-read format,” Eidson said. “This, when combined with our nutritional guide, will assist consumers in making healthier eating decisions.”
Spartan also said it would add fuel centers to two or three stores during the current fiscal year (fiscal 2012), including one new location that opened last month at a Family Fare in Jenison, Mich.
“Looking forward, these strategic initiatives when combined with a lighter competitive opening schedule for the year should result in continued improvement of our business trends during the second half of fiscal 2012,” said Eidson.
The company posted net income of $6 million for the 12-week first quarter, which ended June 18, but said net income would have been up about 2.7%, to $6.5 million, adjusting for charges in both the recent and year-ago quarters.
Retail division sales increased 4.1%, to $345.4 million, primarily due to increased fuel volume and prices, the company said. Comparable-store sales excluding fuel fell 0.9%, vs. year-ago levels.
Distribution sales were up 4.8% to $257.1 million, for an overall sales increase of 4.4%, to $602.6 million.
Retail segment operating earnings for the quarter increased 23% to $6.6 million, which the company attributed to cost containment, partially offset by increased debit/credit card fees.
Operating earnings in the distribution division were down 7.3% to $7.4 million, which the company attributed to a lower rate of procurement gains, increased inventory-accounting expenses, and the favorable settlement of a claim in the prior year.