MINNEAPOLIS — Nash Finch Co. here said the difficult economy and ongoing deflation continue to make it difficult to grow the top line.
Alec Covington, president and chief executive officer, said revenue “will continue to be under pressure because deflation is not over and because of the consumer shopping pattern we continue to see in the stores.”
He made his remarks during a conference call discussing first-quarter results.
Covington said Nash Finch expects wholesale revenues to drop between $22 million and $25 million in the second quarter as a customer in the Southeast transitions to another supplier. SN has learned the customer is Piggly Wiggly, two of whose franchisees — operating a total of approximately 25 stores — are moving to Merchants Distributors Inc., Hickory, N.C.
Covington also warned that Nash Finch may drop customers it does not believe are financially secure.
“We watch the characteristics of our customer base very carefully,” he said in remarks to investors. “We watch their financial condition, and we watch how solid they are, and there will be occasions where we are not willing to continue to accept the level of risk associated with maintaining a particular customer base.”
Nash Finch reported net income for the 12-week first-quarter, which ended March 27, fell 44.9% to $7.9 million, while overall sales rose 3.5% to $1.2 billion. The earnings decline was driven primarily by a non-cash gain from the acquisition of three military DCs in January 2009.
Wholesaling revenues fell 3% to $583.8 million. Retail sales dropped 8% to $117.9 million, with comparable-store sales down 3.7%.
