MINNEAPOLIS — Nash Finch Co. here said it expects to see a sharp decrease in food inflation in 2012 as consumers will no longer tolerate price increases.
“The sheer level of inflation for food, we believe, will dissipate dramatically in 2012, just simply because the economic environment is not strong enough to support it,” said Alec Covington, president and chief executive officer of Nash Finch, in conference call discussing year-end financial results.
In addition, he said, the “blatant sticker shock” of price increases has reduced consumers’ purchasing power. “We're seeing that,” he said. “When you run items on sale in the supermarket, the sales of those items are greatly exaggerated at the cash register. So you have to be very careful with markdowns and those kinds of approaches.”
He also said Nash Finch will undertake some investments in 2012 to improve its private-label offering and to upgrade and consolidate some distribution facilities.
Including one-time charges, the company said its net income fell by about 51% in the 12-week fourth quarter, which ended Dec. 31, to $8.2 million, on a sales decline of 0.9%, to $1.14 billion. For the year, net income was down 29.7%, to $35.8 million, on a sales decline of about 3.7%, to $4.81 billion.
The company said consolidated fourth-quarter EBITDA, adjusted to exclude the impact of significant items totaling $1.2 million in both the fourth quarter 2011 and 2010, respectively, increased 0.6% to $34.6 million. For fiscal year 2011, consolidated EBITDA, adjusted to exclude the impact of significant items totaling $6.4 million and $4.5 million in 2011 and 2010, respectively, increased 2.6% to $145.7 million.