MINNEAPOLIS -- Nash Finch Co. here said oversupplies in its West Coast produce subsidiary resulted in lower prices and contributed to lower earnings, despite record sales, for the year and fourth quarter ended Dec. 31.
Net income declined 2.5% to $15.5 million for the year and 32.3% to $3.6 million for the 12-week quarter. Sales rose 4% to $2.8 billion for the year and 3.4% to $656.5 million for the quarter.
Company officials said the record sales resulted from new business plus the acquisition in January 1994 of Food Folks, a 23-unit chain based in Lumberton, N.C.
Al Flaten, president and chief executive officer, attributed the lower-than-expected earnings primarily to higher charges in last-in-first-out inventory, higher interest expense and higher health care claim costs, as well as "a substantial decline in earnings from the company's West Coast produce operations [Nash DeCamp Co., Visalia, Calif.] due to poor market prices caused by excess supplies of quality product."
"Without the negative effect of those factors, the company's earnings would have been much improved over those of 1993," Flaten said.
Flaten also said results for the company's convenience-store distribution centers in the Southeast continued to be negatively impacted by low margins on tobacco products.
Gary Giblen, managing director of Smith Barney, New York, said Nash Finch is experiencing the same problems as other wholesalers -- "a decline in the amount of deal money going to wholesalers versus the chains, the result of which is that all wholesalers are struggling."
