SpartanNash projects strong preliminary results for first quarter

SpartanNash has released preliminary fiscal 2022 first-quarter results that include solid sales gains and raised guidance for the full year and long-term financial targets.

For the 16-week first quarter ended April 23, net sales are projected at $2.74 billion to $2.77 billion, up between 3% and 4.1% from $2.66 billion a year earlier, Grand Rapids, Mich.-based SpartanNash said Thursday. Those totals mark a rebound from the 2021 first quarter, when net sales were down 7% after the grocery distributor/retailer cycled a pandemic-driven sales surge.

SpartanNash expects its retail business unit to post preliminary comparable-store sales growth of 7.2% for the first quarter. A year ago, the company reported a 7% decrease in comp-store sales following a 15.6% jump from COVID-fueled sales the 2020 quarter.

On the earnings side, SpartanNash forecasts preliminary net income of $18.7 million to $19.7 million for the 2022 first quarter, compared with $19.5 million in the prior-year period. Adjusted EBITDA is pegged at between $75.6 million and $77.6 million, up from $64.8 million in the 2021 quarter.

"During the past year, with our refreshed executive leadership team at the helm, we have driven change through our strategy, operating model and ‘People First’ culture to enhance profitable growth and shareholder returns." — Tony Sarsam, SpartanNash CEO (Photo courtesy of SpartanNash)

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“We kicked off 2022 with significant momentum, achieving solid preliminary results in the first quarter and surpassing our internal expectations,” SpartanNash President and CEO Tony Sarsam said in a statement.

SpartanNash noted that the positive preliminary report for the first quarter reflects the company’s efforts in navigating through “a dynamic environment, including a period of continued supply chain disruption and limited labor availability.” Factors behind the results include an ongoing supply-chain transformation, which SpartanNash said secured more than $15 million in run-rate cost savings and met its initial full-year commitment of $15 million to $30 million of annualized savings in the first quarter, while delivering roughly a 7% improvement in throughput rate year over year.

Besides comp-sales momentum in the retail business, SpartanNash said its military distribution segment achieved a preliminary operating margin of 0.21% to 0.25% and an adjusted EBITDA margin of 1.5% to 1.6% in the quarter, topping a turnaround target of 1% as operational and supply chain improvements took hold. The company added that it also expects a “sizable benefit” from the inflationary product cost environment.

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“During the past year, with our refreshed executive leadership team at the helm, we have driven change through our strategy, operating model and ‘People First’ culture to enhance profitable growth and shareholder returns,” Sarsam stated. “Building on our core capabilities — people, operational excellence and insights that drive solutions — we introduced ‘Our Winning Recipe’ to set the strategic direction and launch a new period of growth for SpartanNash.”

With the strong preliminary first-quarter results, SpartanNash has lifted its guidance for the full 2022 fiscal year ending Dec. 31. Net sales now are projected at $9 billion to $9.3 billion, up from the previous guidance of $8.9 billion to $9.1 billion. Adjusted EBITDA for the year is forecast at $224 million to $239 million, marking a $10 million uptick at the bottom and top ends of the prior estimate $214 million to $229 million. The company added that it also expects a “steady earnings pace” in the remaining three quarters of fiscal 2022.

Long-term financial targets also have been upgraded. By 2025, SpartanNash said it expects to top $10 billion in net sales, which would signal an increase of at least 12% from fiscal 2021. The company also is aiming for adjusted EBITDA of over $300 million, which would be a gain of at least 40% from fiscal 2021, as well as adjusted EBITDA margin of 3% of net sales, an increase of 20% from fiscal 2021.

“We are pleased to provide our long-term financial targets fueled by the progress we have already made toward our transformation, propelled by our dedicated associates and supported by ongoing execution of our strategy,” Sarsam added.

Full fiscal 2022 first-quarter results are scheduled to be reported on June 2. SpartanNash also plans to hold its 2022 annual shareholders meeting on June 9, where the company’s slate of board nominees will be challenged by activist investors.

SpartanNash’s core food distribution segment distributes to all 50 states, supplying its 145 corporate-run supermarkets in nine Midwestern states and over 2,100 independent grocers nationwide. The company also distributes to 160 military commissaries and over 400 exchanges in United States and internationally. SpartanNash’s network of owned-and-operated supermarkets includes the banners D&W Fresh Market, Dan’s Supermarket, Family Fare, Family Fresh Market, Forest Hills Foods, Martin’s Super Markets, No Frills Supermarkets, SunMart, Supermercado Nuestra Familia and VG’s Grocery in Michigan, Indiana, Iowa, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.