GRAND RAPIDS, Mich. -- Spartan Stores here said strong comparable-store sales growth and improvements in distribution helped drive consolidated net sales gains of 5.1% in the 16-week third quarter ended Jan. 3, although the company still reported a loss.
" said Craig C. Sturken, chairman, president and chief executive officer, Spartan.
The company operates 57 retail food stores under several different banners and 21 deep-discount drug stores. Last month, the company unveiled a plan to consolidate its supermarkets under the Family Fare and Glen's Markets banners.
Sturken said gains in the company's distribution segment, which supplies 330 independent supermarkets in Michigan, were the result of more proactive marketing and service improvements.
The higher sales volumes also helped drive growth in operating earnings, as they were leveraged against fixed costs, the company said. Operating earnings in the distribution business grew 47% during the quarter, to $7.4 million, compared with results from last year's third quarter.
Third-quarter operating earnings for the company as a whole totaled $6.1 million, vs. an operating loss of $48.2 million in the year-ago period, which included a $47.4 million pretax charge for asset impairment and exit costs. Operating earnings from the most recent quarter were also affected by an after-tax charge of $5.7 million for fees related to the company's debt financing.
The company said the fees led to a loss of $4.1 million in the third quarter, compared with a loss of $57.1 million in the year-ago period.
Operating losses in the company's retail division declined to $1.3 million in the period, vs. a loss of $53.3 million in the year-ago period. In addition to the favorable comparisons against the charges in the year-ago quarter, Spartan also attributed the stronger performance in the third quarter to "better operational execution."