GRAND RAPIDS, Mich. — Spartan Stores here last week said comparable-store sales fell 6.9% in the fourth quarter amid deflation, economic pressures and competitive activity.
Net income for the quarter, which ended March 27, fell about 62%, to $3.24 million, on a 3.9% drop in sales, to $558.8 million. For the year, net income fell about 31% to $25.56 million, on a slight dip in sales, to $2.55 billion. Deflation contributed about 1.8% to the comp-sales decline, the company said in a conference call with analysts.
Excluding a $4.8 million pre-tax charge for restructuring costs, fourth-quarter adjusted operating earnings were $13.7 million, compared with $17.3 million a year ago. As reported, fourth-quarter operating earnings were $8.9 million.
“Although we continued to confront a challenging economic and market environment, this is the second consecutive year that we have achieved annual adjusted EBITDA of more than $100 million,” said Dennis Eidson, Spartan's president and chief executive officer. “We continue to remain cautious in the near term, but are encouraged by the more positive trends in consumer confidence, discretionary spending and employment stability.”
Retail division sales in the fourth quarter were $314.4 million, down about 5% compared with the same period last year, which the company attributed to the lower comps, the loss of $6.2 million in sales from four stores that were sold or closed in the last year, and the cycling of a successful grand reopening a year ago.
Retail operating earnings were $900,000, compared with $2.7 million a year ago. Adjusted retail operating earnings in the recent quarter were $1.5 million after certain discontinued real estate projects.
Eidson said the negative comps were driven more by traffic than basket size, but traffic trends appear to be improving.
“Early in the new fiscal year, we're seeing an improvement in that traffic number that seems to be pretty meaningful,” he said.
Food-cost deflation, he added, was “mixed,” with some commodities up and others down.
“We suspect that in the second half of the year, it's going to be better than the first half, and so our business model implies that we'll gradually see modest inflation begin to creep back in over the course of the year.”
