Dive Brief:
- SpartanNash reported a consolidated net sales increase of 5.3% in the fourth financial quarter, to $1.92 billion, according to a company release — slightly below the Wall Street estimate of $1.94 billion. The distribution channel once again drove growth, with sales up 13.3% over the year-ago period, to $950.2 million. Sales to military commissaries and exchanges also increased modestly, from $510.4 million a year ago to $524 million.
- The retailer/wholesaler reported earnings of $.41 per share, in line with analysts' estimates. Gross profit, meanwhile, dipped to 13.2% of sales versus 14.2% one year prior. The company attributed this to the slow return of inflation along with rising healthcare and transportation costs.
- SpartanNash's retail stores, which include 143 locations under the Family Fare Supermarkets, D&W Fresh Market, VG's Grocery, Dan's Supermarket and Family Fresh Market banners, continue to struggle in competitive markets. The company posted comp store sales declines of 3.2% and a drop in overall sales of 6%, to $450 million.
Dive Insight:
SpartanNash's wholesale arm continues to drive the company forward, with organic growth up 3.7% and the addition of Caito Foods, acquired in 2016, increasing its distribution reach. But this side of the business is not gaining as much as it should, with Caito's Fresh Kitchen facility slow to come online last year, and incurring higher-than-expected startup costs. Freight costs also weighed on profits, as has a widespread trucker shortage that threatens to worsen in the months and years to come.
Along with Spartan's retail business, which continues to struggle against price-focused competitors like Walmart and Aldi, investors aren't particularly high on the company right now. Its stock price has dropped by close to 50% on the year, and currently stands at just over $22 per share.
But Spartan is taking steps to improve its stores and its distribution business. It's remodeling Family Fare stores to focus more on fresh foods and a unique shopping experience. It's also closing underperforming stores, and expanding its Fast Lane e-commerce service, which debuted last year and now operates from around 40 stores. The company recently introduced digital coupons that can be automatically redeemed by online customers.
On the wholesale side, Spartan noted that its Fresh Kitchen facility will contribute more to its bottom line in 2018. It also aims to add more accounts, and to add incremental sales with high-growth retailers.
