MINNEAPOLIS -- The stock of Nash Finch Co. here plunged nearly 30% after the company said its earnings for the year would be far below projections.
The company said the recent acquisition of two warehouses from Roundy's Supermarkets, Milwaukee, Wis., distracted Nash Finch from its other operations.
It said retail gross profit margins declined due to "inadequate execution in pricing," while wholesale margins fell because of promotional spending by vendors. Integration costs from the acquisition were also higher than expected.
"Clearly the acquisition of the Westville, Ind., and Lima, Ohio, divisions earlier in the year resulted in a lack of focus in our core business," said Ron Marshall, chief executive officer, adding that the issues were "fixable."
The company now expects earnings per share for the year ending Dec. 31 to be $3 to $3.25 per share, vs. previous projections of $3.70 to $3.89 per share.
In a report last week, Janet King, analyst, JP Morgan, said, "Nash Finch's issues are unlikely to rebound in the near future.
"We are puzzled as to why margins could be so materially impacted between Nash Finch's second-quarter earnings release [when management reaffirmed core fiscal-year guidance on July 21] and now."