Martin's Leaves Nash Finch for Spartan

JON SPRINGER and MARK HAMSTRA

GRAND RAPIDS, Mich. — Spartan Stores here said last week it has added the Center Store business of Martin's Super Markets, South Bend, Ind., making the 20-store chain its largest customer.

Spartan, which had been supplying Martin's with GM and HBC, will now add dry grocery, frozens and dairy products, as well as Spartan's private-label lines.

“Over the last several weeks, we've been through a process to compare programs and thought it was time to make a change,” Rob Bartels, president and chief executive officer, Martin's, told SN. “It's not merely a financial decision. It's a combination of quantitative measures and a qualitative decision based on culture and plans for the future.”

Nash Finch, Minneapolis, which had been Martin's supplier since acquiring an Indiana warehouse from Roundy's two years ago, said in a statement that the business it is losing totaled $153 million in sales and $3 million in EBITDA in 2006.

“While we still have a great deal of respect for the Nash Finch team and their personnel, it was a carefully considered transition,” Bartels said.

Craig Sturken, chairman, president and CEO of Spartan, told SN last week that the new business fits into its geographic expansion plans.

“We are pursuing a growth strategy, and the areas we have to grow are into Ohio and Indiana,” he said. “We've worked hard to convince Martin's we were a value-added distributor who provided more than just dropping boxes off at the back door. They've been a participant in the value-added services we provide, such as model stores, competitive analysis and category management.”

Bartels said his own company has a lot of strengths in those areas as well, but at the same time he appreciates Spartan's know-how.

“We have pretty solid bench depth in our own organization, and in some cases don't use all the supplier-provided programs — that puts a premium on cost of goods,” he said. “Saying that, we look hard at folks who do a competent job of category management and inventory control and go-to-market strategy. We may not use all those programs, but having a player who's conversant in them is a good thing.”

Nash Finch also reported last week that profits in its retail and wholesale divisions improved in the first quarter even as sales declined. Despite closing nine stores and posting a 0.3% decline in comparable-store sales, Nash Finch said the retail division recorded a 12.9% gain in profit for the 12-week first quarter that ended March 24, to $4.8 million, on a 10.4% decline in sales to $135.6 million, compared with year-ago results. The company attributed the profit gains to improved gross margins.

Distribution profits improved 1.9%, to $18.2 million, on a 0.9% decrease in sales, to $614.8 million. Overall net income was $5.3 million, vs. $3.9 million a year ago, on a sales decline of 0.2%, to $1.032 billion.