Distribution gains pace at SpartanNash in 3Q

SpartanNash said Wednesday that consolidated sales nudged higher in the fiscal third quarter as new wholesale business offset price deflation pressure and overcame declining sales at its retail stores.

For the 12-week period ended Oct. 8, sales of $1.8 billion increased by 1.1% from the same period last year, and net earnings increased by 2.4% to $29.9 million.

Revenues were paced by a 5.5% increase in sales from Spartan's food distribution segment. Distribution sales of $804.5 million came primarily from new business gains as well as the growth of certain existing accounts, which more than offset the impact of continued deflation.

Retail sales fell 3.6% to $489 million as stores were impacted by falling food prices and challenging conditions in Western geographies. Non-fuel comparable-store sales declined by 1.8% — a sequential improvement from the second quarter's 3% drop — but along with store closures and lower retail fuel prices contributed to the net sales decline.

Sales in SpartanNash's military segment of $506.6 million increased by 0.1% from the same period last year.

“We are pleased with our ability to overcome the continued challenging economic conditions and prolonged deflationary environment to deliver third quarter sales and earnings growth,” Dennis Eidson, SpartanNash's CEO, said in a statement. “These results reflect the strength of our strategy to provide innovative and impactful solutions for our food distribution and retail customers as we benefited from new customer supply agreements and our third consecutive quarter of improved retail comparable store sales trends. During the quarter, we continued to invest in our merchandising, pricing and promotional initiatives, including expanded produce and private brand product offerings, as well as the continued roll out of Open Acres. We also celebrated the grand re-openings of our newly remodeled Omaha stores with encouraging results. In addition, we realized further benefits from our ongoing investments in our supply chain network.”

The quarterly results — which were in-line with expectations — encouraged SpartanNash to narrow its earnings-per-share expectations for the fiscal year by two cents at its top and bottom ends. It is now expecting EPS of $2.09 to $2.16 for the year.