MINNEAPOLIS -- Nash Finch Co. here said last week Alfred N. Flaten will retire as president and chief executive officer, effective June 1.
Succeeding him will be Ron Marshall, 44, who will leave his post as executive vice president and chief financial officer of Pathmark Stores, Woodbridge, N.J., to take the top position with the $4.4 billion distributor.
Flaten, 63, will also retire as a Nash Finch director, it was disclosed at the company's annual meeting last week. The company said it has been seeking a successor to Flaten since last year.
Speaking at the meeting, Flaten predicted sales will be flat or decrease for the remainder of 1998.
To counter slow sales, Flaten announced an overall business strategy that calls for:
Continued focus on cost savings and value-added initiatives.
Complementary acquisitions in existing or contiguous markets.
Ongoing integration of previous acquisitions.
Strengthening of the retail store base.
Expanding the development and promotion of private-label brands.
Implementation of the Horizons management information system.
Planning for the Horizons system began three years ago as part of an effort to differentiate Nash Finch from its competitors, Flaten said. The system will be rolled out in July, with implementation scheduled to be completed next year, he noted.
He said initial estimates of quantifiable benefits from the system amount to $15 million a year upon full implementation in the year 2000, "plus considerable unquantifiable savings."
According to Flaten, successful implementation of Horizons will provide solutions to year 2000 issues; greater flexibility in a changing business environment; greater connectivity opportunities with customers and suppliers; the ability to integrate and standardize information systems; greater business process and work-flow efficiencies; and more powerful decision-making and analysis tools.
Flaten also discussed Nash Finch's financial results for the first quarter ended March 28, which showed lower sales and a loss. Flaten said the loss was due to a recently completed debt refinancing.
"The timing was right to make the move to improve our financing," he told shareholders, "because it will allow us to make selective acquisitions that create shareholder value, remodel existing stores and selectively construct new stores, support growth strategies of strong independent retailers and continue to implement our new Horizons system."
He said the sales outlook for the balance of the year is gloomy.
"For the remaining three quarters we expect revenues will be flat or slightly down on existing customer sales," Flaten said. "We expect our growth will come from servicing new business that we must capture from some other wholesaler, or from servicing other forms of retail."
Flaten said the loss for the 12-week quarter was $2.9 million, compared with earnings of $3.1 million a year ago -- the result of the refinancing, which included $9.5 million in prepayment premiums to pay off private placement loans.
Without the debt refinancing, net income would have been down 1.1% to $2.6 million, reflecting lower sales and the high costs of developing and designing the Horizons system, Flaten said.
Sales for the quarter fell 1.1% to $937 million, with same-store sales at corporate retail stores down 1.2%, or $12 million, reflecting additional competition and the occurrence of the Passover and Easter holidays in this year's second quarter; and sales from military wholesale operations down $7 million, reflecting reduced revenues due to excess inventory at European commissaries and a rise in the price of cigarettes at the commissaries.
Flaten said sales in the company's Super Foods division were hurt by the shutdown of a warehouse in Lexington, Ky., and the consolidation of that business into two other facilities, plus heavy competitive pressures in Michigan and Ohio.
In an interview with SN, Marshall said he accepted the job at Nash Finch "because it's been a longstanding goal of mine to run a company, particularly a company of this size and stature. Nash Finch is a company that has a good deal of promise and assets we can really leverage."
However, he said, it would be premature for him to comment on any specifics of his new job or his plans.
Ted Bernstein, a securities analyst with Grantchester Securities, New York, said what Marshall will bring to Nash Finch is "an understanding of the logistical side of the business because of Pathmark's experience as a self-supplying chain and, since December, as a wholesale customer; a wide-ranging financial expertise, and a good background in supermarket retailing.
"He'll pump new blood and new ideas into Nash Finch, and his leadership will be welcome there."
Bob Lupo, a high-yield analyst with BA Securities, Chicago, said Marshall has "a very solid grasp of the business, and he's someone very dynamic who can take Nash Finch to the next level in terms of improving profitability and dealing with the challenges that wholesalers face."
Over the past five years Nash Finch's growth has come principally through acquisitions, Flaten said, including Super Foods Services, United AG, T.J. Morris Co. and Military Distributors of Virginia. "We recognized some time back that there was a real advantage in size," he noted.
Without the acquisitions, Flaten said, sales gains in 1997 would have been 2% instead of the 30.1% reported, "and that gain would [be the] result of gaining more new retailers than we lost."
