SpartanNash said Thursday it plans to invest in the Nash Finch retail locations it acquired last year, particularly in booming North Dakota.
The Grand Rapids, Mich.-based company has “a fair number of remodels that are going to take place,” said Dennis Eidson, president and CEO, in a conference call discussing first-quarter results. “We're making a particularly significant investment up in the North Dakota market where we're getting strong population growth — and North Dakota has the lowest unemployment rate in the nation at 2.7%.
“It’s kind of refreshing to be in markets where population is growing and there is full employment. So, you can expect that we will be deploying capital strategically in the Nash Finch portfolio over the next couple of years.”
In addition to the store remodels, Eidson said the company also was looking at rolling out a loyalty program to the Nash Finch stores, and remerchandising some locations during the next six months. He noted that Nash Finch’s stores in Omaha, Neb., have been particularly pressured by Walmart’s expansion there.
In contrast, Spartan’s own retail operations posted comparable-store sales gains of 2.5% in the 16-week first quarter, which ended April 19. The comps were boosted 70 basis points by a calendar shift — the slower week that follows Easter took place in the second quarter of this year, as opposed to the first quarter of a year ago.
Eisdon noted that transaction counts were “slightly negative,” while sales per transaction were positive relative to a year ago, boosted by a “pretty robust performance in pharmacy,” where the company has had 13 consecutive quarters with prescription-count gains. He said inflation at the wholesale level was up less than 1%, driven by cost increases in meat and seafood, but offset by deflation in some categories.
Total sales for first quarter increased 199.1% to $2.3 billion, primarily due to $1.5 billion in sales generated as a result of the November 2013 merger with Nash Finch Co., plus the 2.5% comp-store sales gains and new business in the company’s wholesale distribution segment.
Operating earnings were $27.6 million, up about 26%, primarily due to contributions from the merger with Nash Finch, partially offset by merger integration costs of $4.2 million, higher LIFO (last-in, first-out inventory accounting) and stock compensation expense and the impact of low inflation. Adjusted earnings from continuing operations for the first quarter were $15.2 million, compared with $11.4 million last year.
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