MINNEAPOLIS — Nash Finch here said last week it expects sales in its retail store segment to improve between 100 and 200 basis points during the first quarter.
Retail comps for the fourth quarter, which ended Jan. 1, were down 3.5%, compared with negative 6.3% in the third quarter, “and with corporate stores actually performing on a much-improved basis from what they have been, we're expecting continued improvement going into 2011,” Alec C. Covington, president and chief executive officer, told analysts during a conference call.
Nash Finch will take a conservative approach to building its retail business, he explained.
“There is just simply too much capacity chasing too few customers and, in some cases, triggering irrational behavior,” Covington said. “From where we manage this company, we're more concerned about protecting our balance sheet and making sure we're a strong, viable company that protects EBITDA.
“And if along the way we have to give up some revenue to make sure we do that, we've proven ourselves very capable of calibrating our expense lines to match our revenue base, and we'll continue to do that rather than play in these arenas where there is irrational behavior among competitors in the wholesale food business.”
For the 12-week fourth quarter, net income was $16.9 million, compared with a loss of $43.1 million a year ago, while sales fell 6.2% to $1.2 billion. For the year, net income rose to $50.9 million, compared with $2.8 million a year ago, while sales declined 4.2% to $5 billion, and total comps fell 3.6%.
Covington said Nash Finch is satisfied with the success of its Family Fresh format in Wisconsin, with a third location planned this year; and he said the company plans to remodel a store in Farmington, Minn., “with a value format that we're creating.”
Nash Finch also plans to rationalize the customer base in its food distribution segment, he said. “The simple fact is, we find ourselves with some customer relationships that were much larger before the recession, when the economics were very different, but now volume may be far off from where it used to be and the relationship may not be profitable.
“In some cases we're feeling we have an unhealthy amount of risk in some relationships, so you should expect that we will continue to focus on doing the very best we can to grow and protect our top line, but we will not ship product at a loss nor incur unhealthy balance-sheet risk.”