MINNEAPOLIS -- Nash Finch here said last week it believes industry consolidation and rationalization offer several long-range growth opportunities for its wholesale business segment.
Ron Marshall, chief executive officer, cited the sale by Albertsons of 11 stores in Omaha, Neb., to Nash Finch customers; the possible sale of some Winn-Dixie stores in the Southeast to existing customers; and the pending shutdown of two Roundy's distribution centers in the Midwest to support his optimism.
He said the purchase of 11 Albertsons stores in Omaha by Bag 'n Save and No Frills will boost the company's wholesale sales. In response to a question, Marshall said Nash Finch provided "modest financial assistance" to the two customers to help them acquire the stores. "But it was more of a coach-and-counsel approach," he explained.
Marshall said the sale of some Winn-Dixie locations "puts hundreds of stores up for grabs, and we're talking with existing and prospective customers to take advantage of those opportunities, which we believe will extend over two or three years or longer."
He also said Nash Finch was excited about last week's announcement by Milwaukee-based Roundy's that it plans to close distribution centers in Evansville, Ind., and Eldorado, Ill., in September. "We've talked for years about the over-capacity in the wholesale business and how it would be rationalized, and we see [the Roundy's closings] as a tremendous opportunity."
Nash Finch has sufficient capacity to accommodate any increase in volume, Marshall noted, given its ability to maximize capacity utilization at its distribution centers.
Marshall made his remarks during a conference call with analysts to discuss financial results for the second quarter and first half ended June 19, which showed increased sales, a slower decline in comparable-store sales for corporate stores, and a net loss resulting from special charges related to non-cash costs associated with the disposition of 21 corporate stores and inventory markdowns.
Sales for the 12-week quarter rose 2% to $906.4 million, and the net loss was $15.6 million, compared with a net income of $7.3 million, or 61 cents per share, a year earlier. Excluding the special charges of $22.3 million related to the store dispositions and $2 million for inventory markdowns, the company said earnings would have totaled 70 cents per share.
For the half, sales jumped 2.3% to $1.79 billion, with a net loss of $10.9 million compared with a net income of $10.5 million, or 88 cents per share, a year ago. In addition to the special charges, earnings were impacted by $2.3 million paid in the first quarter to lenders as consideration for bond indenture and credit facility waivers; excluding all charges, earnings would have been $1.08 per share, the company indicated.
The 21 stores -- including 10 EconoFoods, five Buy n Saves and three Avanza stores that have been closed and three Avanzas in Denver that are for sale -- represent approximately 15% of Nash Finch's annualized retail sales and approximately 3% of total sales, Marshall said. Excluding the 21 stores, he said same-store sales fell 5.5% in the second quarter, compared with a 9.2% decline in the first quarter.
