SpartanNash reported first-quarter financial earnings that exceeded Wall Street expectations on the strength of cost controls and merger synergies amid flat revenues.
The Grand Rapids, Mich.-based company reported sales of $2.3 billion for the quarter, which ended April 25, essentially flat from the first quarter last year. Total revenues reflected higher sales in Spartan’s distribution and military sales segments and a 7.6% decline in retail sales. The latter decline was due to store closures, significant declines in fuel prices and a 1.2% decline in non-fuel comparable-store sales. Comps were negatively affected by lapping weather-related sales gains related in the prior period, officials said.
Net earnings from continuing operations of $10.3 million was down from $12.5 million in last year’s first quarter, but earnings per share of 44 cents beat estimates of 41 cents. Earnings were impacted this quarter by a $10 million restructuring charge, and by $4.3 million in merger-related expenses in last year’s first quarter.
Dennis Eidson, SpartanNash’s president and CEO, said he was encouraged by progress in the quarter, but noted that retail sales were pressured by some lower-performing stores and competitive market positions acquired in the Nash Finch deal. Comps in Spartan’s legacy Michigan stores were positive in the quarter.
“Omaha has been a particularly difficult marketplace,” Eidson said in a conference call. “There’s been a competitive intrusion led by Walmart and Hy-Vee, and we’re fighting back.”
Eidson said the company is currently rolling out merchandising, pricing and promotional strategies across the acquired stores.
Spartan’s wholesale segment grew sales by 1.6% to $986.4 million in the quarter, and profits in the segment increased by 16% as a result of merger synergies and reduced health care expenses. Military sales increased by 2.2% to $699.4 million and profits improved behind higher sales volume and improved efficiency.
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