GRAND RAPIDS, Mich. — Spartan Stores last week said sales were up in both its retail and distribution divisions in the second quarter, despite ongoing weakness in the Michigan economy.
In a conference call with analysts, Dennis Eidson, president and chief executive officer, said the company is encouraged by the early success of its Yes loyalty-card program, which it is rolling out to additional banners after its initial implementation more than a year ago in the Glen's division.
“We remain excited about our loyalty program, which was rolled out to the consumer in [September] for our Family Fare and D&W Fresh Market locations,” Eidson said, noting that the points-based Yes program is now valid at any of the company's banners across the state.
“To date, we are pleased with the approximately 250,000 households that have signed up for a Yes card at a Family Fare or D&W Fresh Market, and the approximate 720,000 households that we have registered from the program across all of our banners. We believe the participation will continue to grow in the coming weeks and months as more households realize the benefits and sign up.”
The program is giving Spartan “improved connectivity” with its customers, Eidson explained, and allowing it to target offers more effectively. At the Glen's banner, he said, Spartan is continuing to see increased visits from loyal households.
Although sales have been up in line with inflation, the company continues to see margin pressures, and net income for the second quarter was down about 8.8%, to $10.3 million.
The company said its gross profit margin decreased 110 basis points to 21.4%, from 22.5% in the same period last year, which it attributed to a higher mix of distribution and fuel sales, a lower fuel gross margin rate and an increased inventory-related expense of approximately $2.3 million this year vs. last year.
Consolidated net sales for the 12-week second quarter, which ended Sept. 10, rose 2.9%, to $619.6 million, compared with the year-ago period. Adjusted EBITDA for the quarter also improved, by 3.8%, to $31.1 million.
Second-quarter net sales for the retail segment increased 2.8% to $363.4 million, due to increased fuel retail selling prices and increased fuel volume, partially offset by a decline in comparable-store sales, excluding fuel, of 1.3%.
Spartan attributed the decrease in comps to a shift in the timing of food stamp distributions in Michigan to the third quarter from the second quarter of fiscal 2012, and weaker comparable-store sales over the Labor Day holiday selling period due to unfavorable weather conditions and a more cautious consumer.
Second-quarter net sales for the distribution segment increased 3.1% to $256.2 million.