GRAND RAPIDS, Mich. — Low inflation and a cautious consumer base led to a sales slowdown in the third quarter for Spartan Stores, the retailer here said.
Net earnings of $3.4 million for the 16-week quarter, which ended Jan. 5, were down 31.7% from the same period last year but were in line with expectations. Sales totaled $789.9 million, down 0.9%, with non-fuel comparable-store sales at retail stores decreasing by 1.2%.
Dennis Eidson, Spartan’s president and chief executive officer, in a conference call Thursday said retail comps decreased due to minimal inflation, cautious shoppers and a shift toward generic prescription drugs. The sales slowdown was greater in Spartan’s distribution segment, which saw quarterly sales drop 2.2% to $346.1 million due in part to one of its customers discontinuing a pharmacy operation.
Read more: Spartan Wins Chief Supply Deal
Eidson said the company had made adjustments to the selection and décor at its Valu Land discount concept, which the company is continuing to test in six locations including two in metro Detroit. Spartan expects to open a seventh Valu Land location in Dearborn, Mich. this month. Spartan reduced the number of Center Store selections at the Detroit Valu Land stores, which Eidson said made for a more “meaningful assortment of the items that matter most to our customers.”
“It’s still early,” Eidson said of Valu Land. “The two in Detroit, maybe they opened a little faster than what I have liked, but it’s an awfully big marketplace, and it’s tough to get a message out in a brand new market.”
Eidson said he was “thrilled” to have landed a new wholesale account with Chief Supermarkets going into effect next month. He said Chief found Spartan’s offer of more value added services than Supervalu was attractive, while Spartan said Chief’s location in Defiance, Ohio, serves Spartan’s strategic goals of geographic expansion.
“We attempt to add more value-added services and thought leadership than some other wholesalers in this space, and I think that resonated with Chief,” he said. “And it’s strategic for us. We’re in water-locked peninsula here [in Michigan]. We can only grow to the South and we think this is a great springboard.”
For the 40 weeks that ended Jan. 5, net sales of $1.2 billion were down by 0.1% from the same period last year.
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