MINNEAPOLIS -- Nash Finch Co. here said last week that same-store sales in the fourth quarter of last year fell 11.7% amid a difficult economic and competitive environment.
In an earnings call discussing its long-overdue third- and fourth-quarter results from 2002, the wholesaler and retailer reported that consumers appeared to be trading down to less expensive items and switching to alternative channels in the Upper Midwest, where Nash Finch has faced nearly 40 supercenter openings in the past three years.
Retail profits for 2002 were down 13.1%, to $33.7 million, on a slight decline in sales, to $1.03 billion, compared with year-ago results. Same-store sales fell 5.3% for the full year.
Ron Marshall, chief executive officer, said up to three-fourths of the sales decline could be attributed to competition from supercenters.
He also said the troubles of rival wholesaler Fleming Cos., Dallas, which filed for bankruptcy protection last month, present "an array of opportunities for everyone."
The company also filed its 10-Q and 10-K financial reports last week with the Securities and Exchange Commission, detailing its investigation into certain accounting practices. It said it had sometimes inflated vendor invoices in order to pay for the administration of "count-recount" inventory assessments used to determine vendor allowances. It did this by adding cases to the quantity of goods sold.
The company described the practice as common in the industry and appropriate. It said count-recount charges in lieu of administrative fees were approximately $6.7 million in fiscal 2000, $8.6 million in fiscal 2001 and $6.7 million through Nov. 17. 2002, when the company began stating the administrative fee separately on its invoices. Nash Finch said it had notified vendors of the practice, and none had requested refunds for previously charged fees.
The company also adopted a new accounting rule last year for vendor allowances that resulted in a one-time charge of about $7 million.
Excluding goodwill amortization, third-quarter net income was flat at about $7.5 million, compared with year-ago results. Net income for the fourth quarter ended Dec. 28 was $7.6 million, vs. $7.9 million a year ago, excluding charges for goodwill amortization. Full-year net income was up 11.1%, to $23.6 million, on a 2.7% drop in sales, to $3.87 billion.