Three reasons for SpartanNash’s strong Q1 growth

Food solutions company SpartanNash released its financial results for its 16-week first quarter with net sales of $2.91 billion, which is an increase of 5.2% compared to $2.76 billion in the prior-year quarter.

"The improved year-over-year performance reflects the success of our transformational initiatives," said CEO Tony Sarsam, adding that the company is also on track to achieve its fiscal 2025 net benefits of $40 to $55 million.

Sarsam listed three reasons for its strong growth starting with having the right team in place to execute its strategic long-term plan: “We are one, advancing our synergies between wholesale and retail segments. Two, rolling out a robust funnel of operational excellence initiatives, and three, prudently managing our capital allocation.”

SpartanNash operates two complementary business segments — food wholesale and grocery retail, which also contributed to the year-over-year increase. Reflected sales growth in both the wholesale and retail segments was favorably impacted by inflation trends. 

Net sales for retail increased $40.4 million, or 5.2%, to $821.7 million from $781.3 million in the prior-year quarter. Retail comparable store sales grew 5.4% for the quarter, primarily due to the inflationary impact on pricing, partially offset by a 6.0% decline in volume.

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Additionally, net sales for its wholesale business increased $103.3 million, or 5.2%, to $2.09 billion from $1.98 billion in the prior-year quarter, due primarily to the inflationary impact on pricing in the current quarter, as well as an increase in volume within the Military channel. 

Following the financial release, Sarsam reiterated on the earnings call that full-year guidance and 2025 long-term targets are still on track. 

“We had a strong start to the year and our strategic transformational plans are working. This is an inflection point in our organization,” Sarsam said on the call.  

While Sarsam talked about the task of managing through challenging macro dynamics and a significant retail wage increase, there were two transformational initiatives driving the confidence SpartanNash has about hitting those full-year and long-term targets.

“We believe that growth benefits from our two transformational initiatives … merchandising transformation and our supply chain transformation will continue driving value. Notably, we expect to realize more than 50% of the total gross benefits from both initiatives by the end of this year, and we expect these actions will also contribute to margin expansion,” Sarsam said. 

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“This gives us confidence in our ability to grow adjusted EBITDA by at least 40% in fiscal 2025 compared to 2021. We have momentum behind our strategic plan and there is plenty of runway ahead.”