GRAND RAPIDS, Mich. -- Spartan Stores here will turn its attention to improving its perimeter departments as part of its retail turnaround strategy, President and Chief Executive Officer Craig Sturken said last week.
The retailer-distributor has appointed a new vice president of fresh merchandising to direct the effort, and has completed a "model store" showing product assortment and merchandising that Spartan's corporate store managers and independent customers will tour and discuss later this month. A similar model store program demonstrating center store category management successfully launched Spartan's in-store turnaround effort this spring, Sturken said.
"We are continuing to execute our center store category management initiative, but as that process becomes more a part of our daily operation, we are moving to the next phase of our business improvement plan. A major component of that is merchandising the perimeter departments," Sturken revealed during an earnings conference call. "We view it as a key component of our strategy and next logical area to improve."
Brian Haaraoja, who was recently named vice president of fresh merchandising, will lead Spartan's perimeter efforts, Sturken said. Haaraoja most recently worked for Shaw's, West Bridgewater, Mass., and has previous experience with Ahold's Giant of Landover division and Jewel-Osco.
Spartan reported a net profit of $7 million, or 34 cents a share, for its fiscal second quarter ended Sept. 11. Profits were up 292% as compared to the same period last year. Overall sales decreased by 1% to $486.7 million, reflecting lower wholesale sales that offset an increase of 0.7% in retail sales. Comparable-store sales increased by 1.4% during the quarter, Sturken said.
Spartan said its 2.4% decrease in its distribution segment was due to the loss of two distribution customers and the shift of an annual private-label promotion to the third quarter. By segment, Spartan reported retail sales of $232.2 million and wholesale sales of $254.5 million.
For the first 24 weeks of its fiscal year, Spartan reported sales of $961 million, an increase of 0.7%, and earnings of 8.5 million, as compared to a $4.5 million loss. Profit has improved as a result of better cost control, more efficient store labor and lower depreciation, as well as a $1 million termination payment received from a former distribution customer.
In light of the lost distribution accounts and the impact of anticipated competitive superstore openings, Spartan lowered its previously announced yearly sales projections from 1% to 3% growth, to flat to 1%.
Sturken said Spartan will add two fuel centers and three in-store pharmacies during the third quarter as it continues to add convenient amenities to its stores. The company's in-store pharmacies and its The Pharm chain of stand-alone pharmacies have experienced reductions in prescription sales that Sturken attributed to a United Auto Workers mandate requiring members to switch to mail-order prescription refills for maintenance medications.
During the quarter, Spartan introduced new private-label ice cream and yogurt offerings. Sturken said early sales results were favorable.