MINNEAPOLIS - Nash Finch Co. here said last week it is making progress on solving the integration problems at two acquired distribution centers and improving relationships with its vendors.
Nash Finch executives also said they believe Supervalu's focus on the integration of Albertsons may provide openings to pick up additional volume.
The process of integrating warehouse facilities in Lima, Ohio, and Westville, Ind. - which were acquired from Roundy's Supermarkets, Milwaukee, last March - "ended with us not focusing on business development as we should have," Leanne Stewart, senior vice president and chief financial officer, told analysts during a conference call following the release of financial results for the fourth quarter and year that ended Dec. 31.
"But when you make a transition like that, there's confusion on how to order and what products are available," Stewart said, "as well as issues with switching private label, and the business development cycle involves a bit of a courtship, so it takes awhile to get real wins. But you will see improvements going forward."
Regarding efforts to re-establish stronger relationships with its vendors, Bruce Cross, executive vice president, merchandising, said Nash Finch is making "good progress but it's a complex process."
The company has met with large numbers of top-level vendor managements "going down a path of productive solutions for us and them," Cross said. "We're also re-establishing our corporate stores as a true chain so vendors can work with us to drive our mutual success.
"In addition, one thing we did with the [distribution center] acquisition was confirmed with our customers and vendors how to go to market on a more clearly defined regional basis, and we're executing against that plan more effectively to drive promotional funding."
Stewart said Nash Finch is "paying a lot of attention" to the possibilities inherent in Supervalu's pending acquisition of parts of Albertsons, "and we would hope they would lose some focus that might provide us with some opportunities to grow our food distribution business as they work on the integration."
Allister Graham, chairman and interim chief executive officer, said Nash Finch is "working rather diligently" on finding a permanent successor to CEO Ron Marshall, who retired earlier this month, "and we're optimistic we will have someone very soon."
Accordingly, the company said it would not give any financial guidance for fiscal 2006 so the new CEO can "fully assess the opportunities and challenges facing the company unconstrained by any perceived need to achieve a previously announced earnings target," Stewart said.
Net income for the 12-week fourth quarter rose 20.1% to $13.4 million, including a $1.1 million boost from the reversal of tax reserves, while sales rose 22.1% to $1.1 billion, primarily as a result of the acquisition of the two distribution centers, the company said. For the year, net income rose 176.3% to $41.3 million, including the impact of several one-time events, while sales increased 16.9% to $4.6 billion.
Sales and profits in the company's food distribution segment were up during the fourth quarter and the year; sales and profits in the military distribution segment rose for the year, although sales fell slightly while profits rose in the quarter; and profits in the retail segment rose but sales fell in both periods due to store closures over the last two years, the company said, while same-store sales fell 2.7% for the quarter and 4.1% for the year.
