MINNEAPOLIS -- Nash Finch Co. here said last week results for the second quarter and first half ended June 16 prompted the company to revise its earnings estimates upward for the year.
Ron Marshall, president and chief executive officer, said the company expects earnings per share to rise 26% to 30% for the year to $1.70 to $1.75; earlier, it had forecast a 15% to 16% increase per share.
Net income rose 21.2% to $5.3 million, or 44 cents per share, for the 12-week quarter and 29.2% to $8.5 million, or 72 cents per share, for the half, while sales rose 4.8% to $949.6 million for the quarter and 4% to $1.9 billion for the half.
Earnings before interest, taxes, depreciation and amortization increased 12.5% for the quarter to $28.5 million, or 3% of sales, compared with $25.4 million, or 2.8% of sales, a year ago; for the half EBITDA jumped 17.5% to $53.4 million, or 2.9% of sales, compared with $45.5 million, or 2.6% of sales, in last year's first half.
Speaking with industry analysts in a conference call last week following the release of these results, Marshall said, "The strategy we laid out three years ago, and the hard work of our associates, is clearly reflected in our strong earnings momentum, with the second-quarter increases representing the seventh consecutive quarter with year-over-year improvement in comparable earnings."
Marshall said he believes EBITDA could reach 6% to 6.5% in the near term.
He also said the company plans to expand two of its store formats -- Wholesale Food Outlet, its Hispanic price-impact store, and Buy N Save, its limited-assortment store. Helping to spearhead those expansions, he said, will be two new executives: Rafael Hernandez as director of ethnic marketing and Stacey Mack as director of extreme value retailing, both new positions.
Hernandez was formerly director of marketing for Fiesta Mart, Houston, and Mack is a former director of operations for Aldi, Batavia, Ill., a position he left in 1997 to join Smoker Friendly, a chain of 19 specialty convenience stores.
Sales in Nash Finch's retail segment declined 3% to $237.1 million in the quarter and same-store sales rose 2%, while operating profits increased 5% to $78.7 million. The company said revenues for the retail segment were negatively impacted by the company's announcement in April that it would exit the Southeast by selling its 20 Sun Mart IGA stores there.
Most of those stores have been sold to existing customers, with the rest expected to be sold shortly, the company said last week.
With most of the Southeast stores removed from the comparison, Nash Finch said same-store sales for the half were flat, "which came as no surprise. With the give-and-take we're seeing in markets now [in the Upper Midwest, where Nash Finch operates 97 corporate stores], we expect to see flat performance through the rest of the year," Marshall said.
In the food distribution segment, sales rose 8% to $478.3 million for the quarter and operating profits were up 13% to $13.6 million. Nash Finch said it captured $25 million in annualized revenues in new distribution business during the quarter.
Sales in the military segment rose 8% to $234.1 million for the quarter, and operating profits rose 12% to $5.6 million for the half. The company said it added $60 million in new annualized revenues from over 40 suppliers to military commissaries in the quarter.
