GRAND RAPIDS, Mich. - Spartan Stores here last week said it was interested in "a couple" of the Carter's stores that are being sold off after that chain filed Chapter 7 bankruptcy.
"There are a couple of spots we think would be good for us," said Craig Sturken, chairman, president and chief executive officer, Spartan, in a conference call discussing Spartan's first-quarter results. He noted that most of the 14 Carter's stores, located in central and northern Michigan, are in poor condition and almost depleted of inventory.
He also said Spartan "realized a nice increase in sales" at the five company-owned Glen's stores that compete directly with Carter's in the northern end of Michigan's lower peninsula.
Following on its recent acquisition of the D&W Food Stores chain, Spartan last week posted a 15% gain in first-quarter sales, but said net income for the 12-week period, which ended June 17, was basically flat because of some one-time charges.
Net income was $2.7 million on sales of $528 million. Operating income "improved significantly" to $6.9 million, including a $4.5 million pre-tax charge for the closure of two stores and a central bakery, the company said. Margins improved due to the larger proportion of retail sales in the mix, which carry higher margins, and to a stronger mix of higher-margin product sales from D&W.
The company said first-quarter EBITDA rose more than 44%, to $17.6 million.
Retail sales grew 24.5% to $252.2 million, driven by the D&W acquisition and a 4% overall comparable-store sales gain. The later Easter this year boosted comps by 1.5%, the company said, and fuel centers accounted for 3.1% of the comp-store growth.
Comparable-store sales at the company's supermarkets were up 4.7%, while comps at Spartan's Pharm deep-discount drug stores grew 0.8%.
In the conference call, Sturken said Spartan was launching a repositioning of its Pharm chain, which operates in the Toledo, Ohio, area, following a successful test at a single store. The repositioning includes adding a third-party clinic in the stores and removing the stores' video offering.
"The results so far have been encouraging," he said, adding that the capital investment for the change is minimal.
Distribution sales grew 7.5% to $275.9 million, compared with year-ago results, which the company attributed to the addition of new distribution customers, an increase in sales to exiting customers and a later Easter this year. Among the new customers is Fishers Foods of Cleveland, which Spartan recently began supplying with high-end President's Choice private-label products.
Sturken said the company sees opportunities for growth in Ohio, both on the retail and distribution sides.
Spartan projected comparable-store sales growth for the rest of the year in the mid-to-high single digits, including fuel, as the company cycles a rash of supercenter openings last year and it rolls out more fuel centers.