MINNEAPOLIS -- Nash Finch Co. here said last week its retail business continued to show continued strong growth in the 16-week third quarter ended Oct.7.
In the period, retail revenues rose 9.9% to $322 million, and retail profits jumped 47% to $10.3 million. Same-store sales increased 2% for the quarter and 0.7% for the year.
Revenue from the company's food distribution segment, however, declined. Nash Finch attributed the fall-off to recycling against distribution centers closed in 1999, as well as shifting the sales of Hinky Dinky, a former wholesale customer acquired by Nash Finch in January, to the retail side.
Wholesale profits were also affected by the roughly $1 million cost of service new business from the company's Lumberton, N.C., distribution center. Nash Finch said it expects to realize benefits from this new business in the fourth quarter.
The company also said it had gained significant new business in the third quarter, including an expected $200 million in annual sales from Food Farm, Kinston, N.C., a group of independent retails that operates 63 stores under the Piggly Wiggly banner.
In a conference call with investment analysts following the release of the quarterly results, Ron Marshall, Nash Finch president and chief executive officer, said he expects the performance of the company's wholesale segment to improve.
"The thing I have found most pleasing since coming to Nash Finch is the real opportunity to grow share in the wholesale business," he said. "We have spent a tremendous amount of time and a lot of money building our skill set. I think there is a significant opportunity here, but the selling cycle in wholesale is long. It's difficult to pinpoint when new customers will come on-line."
Marshall said he did not expect growing competition from supercenters to hurt the performance Nash Finch's stores or those of its retail customers. "We operate under the assumption that every store we own or service will eventually see a supercenter in their area," he said. "We have a compelling differentiating strategy."
At the quarter's end, Nash Finch operated 122 stores. During the quarter, it sold three stores in the Southeast, one store in the Midwest to independent customers. The company also closed one underperforming unit in North Carolina. It opened a new Buy n Save limited assortment store in Cloquet, Minn., and a 65,000-square-foot replacement Econofoods store in Cedar Rapids, Iowa. Shortly after the quarter ended, Nash Finch acquired a store in New Prague, Minn., which it converted to an Econofoods.
Nash Finch companywide revenues for the quarter fell 5.4% to $1.22 billion, while earnings, exclusive of non-recurring gains in third quarter 1999, rose 135.3% to $4 million. Including non-recurring gains from third quarter 1999 -- from the sale of the Nash-De Camp produce subsidiary and Nash Finch's stake in two dairies -- earnings were $8 million.
Year-to-date, revenues declined 4.1% to $3.03 billion, and earnings rose 108% percent to $10.6 million, excluding the gains last year from the Nash-De Camp and dairies sales.
