GRAND RAPIDS, Mich. — Spartan Stores here last week said strong comparable-store sales in its retail division helped drive gains in profits on continuing operations for the third quarter, although net income was off after a one-time gain in the year-ago period.
Net income for the 16-week quarter declined about 16%, to $8.91 million, due primarily to a one-time tax benefit of $2.7 million in the prior year, but operating earnings rose 17.4%, to $17.9 million. Sales for the third quarter were down about 0.75%, to $781.9 million.
Gross margin for the third quarter increased 60 basis points to 20.1% from 19.5% in last year's third quarter, which the company attributed in part to more profitable retail sales.
Dennis Eidson, president and chief executive officer, noted in a conference call with analysts that it was the company's 10th consecutive quarter of retail sales growth and 12th consecutive quarter of double-digit operating earnings growth.
“We are very pleased to continue our long track record of operating earnings improvement, particularly in this challenging and recessionary economic environment where consumers have become even more value-conscious,” he said, citing the company's private-label program as being especially useful in attracting value-oriented shoppers.
Private-label penetration was up to 26.4% of sales in the quarter, compared with 23.7% of sales a year ago.
Comparable-store sales, excluding gasoline, were up 3.3% for the quarter. Retail operating earnings were up 58%, to $6.8 million, on a 1.8% sales gain, to $384 million.
Operating earnings in the distribution segment were up about 1.8%, to $11.1 million, on a 3.4% decline in sales, to $397.9 million. The company attributed the decline in sales to lower pharmacy product sales of about $9.1 million and the loss of about $2.6 million in distribution sales to VG's Food and Pharmacy, which Spartan acquired last year.
| Qtr Ended | 1/3/09 | 1/5/08 |
|---|---|---|
| Sales | $782M | $788M |
| Change | -0.75% | |
| Comp-store | +3.3%* | |
| Net Income | $8.9M | $10.6M** |
| Change | -16% | |
| Inc/Share | 41 cents | 49 cents |
| 40 Weeks | 2009 | 2008 |
| Sales | $2.0B | $1.9B |
| Change | +4.7% | |
| Comp-store | +3.1% | |
| Net Income | $29.9M | $26.2M |
| Change | +14% | |
| Inc/Share | $1.37 | $1.21 |
* EXCLUDING FUEL SALES. YEAR-TO-DATE COMPS ALSO EXCLUDE THE EASTER HOLIDAY SHIFT. **YEAR-AGO NET INCOME INCLUDES A ONE-TIME TAX BENEFIT OF $2.7 MILLION.