MINNEAPOLIS — Nash Finch intends to boost its customers’ price-competitiveness behind a program to stock the distributor’s private-label items — and remove their competitors.
Retailers that agree to participate in the program, which launched last month, will get more competitive pricing on the items if they add them while also removing competing items — mostly regional packer brands — from the shelves, Alec Covington, Nash Finch’s chief executive officer, said last week. Nash Finch’s private brands include the Our Family, Value Choice and Nash Brothers Trading Co. labels.
“The goal is that both our customers and ourselves can drive our business forward faster in building our private label business, which is critically important to our customers in terms of creating the pricing pressure they need to have within their overall marketplace,” Covington said.
Covington said about 90% of Nash Finch’s 1,500 customers have already agreed to sign up for the program, which already has added 10,000 product placements in stores and is boosting private-label sales penetration.
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“This is going to be a big one for us,” Covington said. “We see a great opportunity to build this program, help our margins, and help our customers compete more effectively in the marketplace.”
Covington’s remarks came during a conference call discussing financial results for the first quarter ended March 24. Slowing inflation and higher investments in marketing programs led to quarterly declines in sales and profits.
Sales for the 12-week period were $1.06 billion, down 3.7% from the same period a year ago. Excluding the effect of closed stores, sales fell by 3.1%. Adjusted net earnings of $6.2 million declined 33.3% as the company experienced “a lag between investments we are making and the results we believe those investments will deliver,” Covington said.
Those investments include the new private-label program and an initiative to improve produce freshness by closing down a redistribution center in Denver that slowed delivery from the West Coast and added costs, he said.
Although quarterly sales decreased, Covington stressed the decline was less severe than the 4.8% slide in the fourth quarter, despite getting a smaller boost from inflation. “We know we’re getting stronger,” he said. “We actually feel pretty good about where we’re headed.”
Covington also touted Nash Finch’s potential to handle national retail accounts, noting that it is currently distributing food for 80 Dollar General stores.
By segment, Nash Finch said military sales of $531.3 million declined by 1.1% due to reduced sales to overseas commissaries. Profits were down in this segment due to increased competition, Covington said.
Sales for the combined retail and distribution segment declined by 6.2% due in part to the sale or closure of six retail stores and a comparable store sales decline of 4.4%. Higher inflation in the previous quarter pressured profits, the company said.