MINNEAPOLIS — Although sales trends remained negative, Nash Finch here last week posted gains in margins and net earnings for its fiscal second quarter, and said the slow economy could spark an aggressive hunt for opportunities this quarter.
Consolidated sales at the distributor declined 5.1% to $1.15 billion for the quarter, which ended June 19. Net earnings improved 12.3% to $10.7 million as a result of debt reduction and expense control, officials said.
In a conference call discussing results, Alec Covington, chief executive officer, said the chain was seeing the ability to generate profits from improvements in the military distribution centers it acquired last year. He said the company would likely purchase three more facilities this quarter, taking advantage of low prices and local government incentives, and setting up the company for future growth.
“We've made the conscious decision to be aggressive in this period of time, to move faster to expand our military network, and not to be afraid to expand our business during these times,” he said. “Frankly, it is the cause of these economic times that we have the opportunity to purchase some of these assets at such compelling prices. We're willing to do that. We're willing to go ahead and spend the money in acquisition costs and start-up costs, which are going to come at us now a little bit, a little bit more and a little bit faster than we had anticipated. But it's all about positioning ourselves for additional future growth.”
Covington said the planned acquisitions would likely increase the capital budget for Nash Finch this year by $15 million to around $60 million.
Covington said results for its traditional food distribution and retail sales were about average for the industry, given the economy. Same-store sales in retail were down by 4.3% in the quarter.
“If you look at our comparable sales and you take out all the noise from business that moved here and there, it really looks very similar to the broader industry,” Covington said. “If you look at our own corporate retail stores, they're operating at about the median of the overall industry. We're not the best and we're not the worst in terms of comparable sales. So I think it's about what we would have expected.”