GRAND RAPIDS, Mich. — A stabilizing Michigan economy as well as distribution efficiencies and a tax benefit helped Spartan Stores post a modest increase in net earnings despite sluggish sales during the fiscal second quarter that ended Sept. 11, the retailer said.
Dennis Eidson, Spartan's president and chief executive officer, said the results demonstrated Spartan's ability to operate during tough economic times, and pointed out some early signs of an economic recovery within the company's sales results.
“We had a good quarter for fresh,” Eidson told analysts in a conference call. “Our fresh performance was better than our Center Store performance, but I think part of that is the way we drove that from a promotional perspective. … In Q2 some of the more basic categories that we had seen over last year go really up — sugar, flour, canned goods — fell off a little bit and were some of the slower categories. And we actually saw growth in organic, not only in our stores but also in the marketplace. I think it may signal the beginning of a little better environment.”
Earnings of $11.2 million, or 50 cents a share, improved by 7.7% as compared with the same period last year and were better than analyst estimates of 45 cents. Consolidated sales of $602 million fell by 1.3%. Comparable retail store sales, excluding fuel, declined 4.7%, which represented a 1.4% improvement over the prior quarter's results.
“Data suggests that the Michigan economy appears to have stabilized, giving us somewhat more confidence than this time last year,” Eidson said. “However, the consumer remains cautious and the competitive environment is still challenging.”