Recent M&A expected to bolster SpartanNash’s business
Wholesale sales and retail comparable store sales were both down during the third quarter
Third quarter results were not consistent for SpartanNash, as the food-solutions company announced on Thursday a year-over-year decline in wholesale sales and retail comparable store sales. Two recent acquisitions, however, might help bolster both ends.
The Byron Center, Mich.-based company recently purchased Fresh Encounter, which includes 49 retail grocery locations in Ohio, Indiana, and Kentucky, and Markham Enterprises’ three fuel centers and convenience stores in Michigan.
During SpartanNash’s call with investors Thursday, Jason Monaco, executive vice president and chief financial officer, said Fresh Encounter is expected to contribute more than $350 million in sales in the retail segment and will bolster SpartanNash’s wholesale business by picking up volume from other distributors. The deal is expected to be completed this month.
The three fuel centers and convenience stores are projected to add $20 million in net sales. That deal is on track to close by the end of the year.
“Looking ahead, we are continuing to evaluate M&A opportunities based on our disciplined M&A framework,” said Tony Sarsam, president and CEO of SpartanNash, during the earnings call, according to a transcript provided by investor website Seeking Alpha. “We find that the stability [of fuel centers] for shoppers fueling up is actually something that’s really attractive. So we think that’s a place where as we’re looking for opportunities to change and grow our footprint we’ll have an eye towards those types of things.”
For the quarter ended Oct. 5, SpartanNash reported decreases in both its retail and wholesale segments. Net sales decreased 0.6% year over year to $2.25 billion, driven by lower volume in the wholesale segment (down 1.6% to $1.58 billion) but partially offset by an increase in volume on the retail end (up 1.9% to $674.6 million). Retail comparable store sales, however, were down 0.7% year over year.
Gross profit was just over $354.6 million during the quarter, a slight increase over the year-ago period, when it was just over $347.5 million.
Adjusted EBITDA came in at over $60.4 million, down $60.9 million a year ago.
SpartanNash is holding firm on its projections for 2024. Net sales for the food solutions company are expected to be between $9.5 billion to $9.7 billion, while adjusted EBITDA is forecasted to be between $252 million to $257 million.
The company’s stock price dropped more than 12% Thursday on the earnings news.
On Monday, SpartanNash announced former Kroger and Target exec Djouma Barry will serve as the company’s new senior vice president and chief retail officer. Barry replaces Executive Vice President of Corporate Retail Thomas Swanson, who will step down and serve as a consultant at the end of the year.
SpartanNash also announced in October it had broadened its Total Rewards benefits program to provide enhanced care options for its employees’ children, adult dependents, and elderly family members.
About the Author
You May Also Like