MINNEAPOLIS -- Nash Finch Co. here said last week it expects the marketplace to remain "exceptionally promotional" for the next 12 months.
That will result in a severe compression of gross margins, said Ron Marshall, president and chief executive officer, "and the challenge for the industry will be to make the appropriate expense reductions to offset that and allow net margins to continue to grow."
Marshall made his remarks in a conference call following the release of the company's financial results for the year and fourth quarter ended Dec. 29, which showed increases in sales and earnings. However, comparable-store sales in the distributor's retail segment declined 1% for the year, and the competitive situation will remain such that Marshall said he anticipates flat comps for the current fiscal year.
"The competitive environment is very difficult, although we've seen some improvement on a week-to-week basis through the fourth quarter and into the first quarter. So the direction right now is positive, but competition remains tough, and we expect comps to be flat for the year."
Sales for the year rose 3.8% to $4.1 billion; net income, excluding an extraordinary charge from early extinguishment of debt in the fourth quarter of 2000, rose to a record $21.3 million, and earnings before interest, taxes, depreciation and amortization rose 14% to a record $120.2 million, or 2.9% of sales. Including the onetime charge, net income was $15.5 million.
For the 12-week fourth quarter, sales were up 1% to $978.1 million; net income, excluding the charge, rose 28.9% to $6.7 million; and EBITDA grew to $30 million, or 3.1% of sales. Including the onetime item, net income was $4.8 million.
Food-distribution sales rose 6.1% for the year, but dropped 1.1% for the quarter. Retail sales rose 0.6% to a record $1.04 billion for the year and grew 7% to $253.6 million for the quarter.