GRAND RAPIDS, Mich. -- Spartan Stores here said earlier this month that it separated its retail and distribution management teams during its second quarter ended Sept. 14, a quarter whose earnings performance James Meyer, Spartan's chairman, president and chief executive officer, termed "disappointing."
During a conference call following the release of results for the second quarter and first half, Meyer said, "We took steps late in the second quarter, segregating key functions in retail and wholesale. This structure was not working because customer needs in each segment are distinct."
He added that the company had also eliminated the advertising component of its distribution marketing program and was passing the lowered costs along to both its retail customers and shoppers at its corporate stores. "This allows for the flexibility both our own stores and our customers have desired," said Meyer. "Both can now design marketing programs that are suitable to their unique demands while benefiting from the larger product discounts that we should be able to pass through."
Meyer said that the structural and pricing "changes are fundamental to our business model" and " integral to our future success."
However, he said he did not think the changes would propel the company's finances into the black for the third quarter. "We believe we are in a position to return to profitability," he said, but "a lot of things would need to fall in place" for Spartan to report a net income that soon.
Meyer also noted that Spartan opened one store on the day of the conference call, a 50,000-square-foot unit in Wyoming, Mich., and is scheduled to open another Oct. 29, a 46,000-square-foot store in Zeeland, Mich.
In the 12-week quarter, net sales decreased 5.3% to $796.7 million, retail sales decreased 7.1%, and comparable-store sales were down 5.2%. The company experienced a net loss of $586,000 and a loss per share of 3 cents, vs. a net income of $9.2 million and earnings per share of 47 cents in the previous second quarter.
Meyer noted that sales in the quarter were stronger in the company's Michigan stores than its Ohio units.
For the first half, sales declined 6.6% to $1.56 billion, and Spartan had a net loss of $44.4 million and loss per share of $2.24, vs. a net income of $14.8 million and earnings per share of 77 cents in the previous first half.
