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Spartan Projects Gains as Value Efforts Take Hold

GRAND RAPIDS, Mich. Spartan Stores here last week said the lingering economic downturn kept pressure on sales in both its retail and wholesale divisions in its first fiscal quarter, although it said it expected trends to improve through the rest of the current fiscal year. I believe that our consumer value profile is improving with the implementation of our value-based merchandising and marketing

GRAND RAPIDS, Mich. — Spartan Stores here last week said the lingering economic downturn kept pressure on sales in both its retail and wholesale divisions in its first fiscal quarter, although it said it expected trends to improve through the rest of the current fiscal year.

“I believe that our consumer value profile is improving with the implementation of our value-based merchandising and marketing campaign that we launched in March,” said Dennis Eidson, president and chief executive officer, in a conference call with analysts discussing results for the 12-week first quarter, which ended June 19.

In addition, he said, the company is seeking to further refine its marketing and merchandising efforts through data obtained using the fledgling loyalty-card program at its Glen's division.

“The data is providing insights on our consumer purchasing behavior that we haven't had before, and we are using the information to conduct much more efficient and targeted marketing strategies,” Eidson said.

Spartan said the company plans to expand the program to other retail geographies during the current fiscal year.

The company's D&W Fresh Market banner, a more upscale store in higher-income markets, has fared better than some of its other chains, where high unemployment is taking a toll on spending. Traffic trends in general have been improving, Eidson said in response to an analyst's question.

In the first quarter, Spartan said same-store sales overall in its retail division were down 6.1% compared with the year-ago period, and distribution sales were off as well, leading to an overall sales decline of 3.15%, to $577.2 million. In addition to the weak economy, the company said retail price deflation and the loss of sales from previously sold or closed stores also contributed to the decline, which was partially offset by higher fuel sales and new store openings.

Net income for the quarter was down about 12.7%, to just under $6 million, compared with year-ago results.

Excluding one-time charges related to warehouse consolidation and asset impairment, adjusted first-quarter operating earnings were $14.1 million, compared with $15.7 million in the year-ago period. As reported, first-quarter operating earnings were $13.3 million, vs. $15.1 million a year ago.

In retail, operating earnings were down 27.4%, to $5.3 million ($5.5 million after adjustments), while sales were down 3.1%, to $332 million.

Distribution segment net sales in the first quarter were down 3.2%, to $245.3 million. Earnings in the segment were up 2.5%, to $8 million, but would have been $8.6 million without the segment's share of one-time charges.