Dive Brief:

• Dave Staples has resigned as CEO of SpartanNash, according to a company release. Dennis Eidson, the chairman of the retailer-distributor's board who served as CEO from 2008 to 2017, will serve as interim president and CEO until a successor is identified.
• SpartanNash also announced it will exit its Fresh Kitchen operation in Indianapolis in an effort to improve operating earnings and EBITDA within its food distribution division. The company will focus on its Fresh Cut operations, which it also picked up in its 2017 acquisition of Caito Foods. SpartanNash expects a $20 million hit to net sales as a result of exiting the Fresh Kitchen facility and $14 million in asset impairment charges applied to the second financial quarter. It expects to complete the transition of its fresh facilities by the end of fiscal 2019.   
• The company announced a preliminary earnings loss of $6.8 million, or 19 cents per share, for the second quarter. It downgraded its earnings outlook for the year from a range of $190 to $205 million to $183 to $195 million. SpartanNash's stock dropped 5% in trading this morning on the news. The company will report full Q2 results on August 14.

Dive Insight:

Dave Staples played an instrumental role in Spartan Stores' merger with Nash Finch in 2013 and in the company’s acquisitions of Caito Foods in 2016 and Martin’s Super Markets earlier this year. But his two-year stint as chief executive was marred by struggles with supply chain efficiency and underperformance among retail stores.

"The board remains confident in the company's strategic direction and its ability to generate top line growth; however, execution has fallen short of our expectations and we believe that now is the time for a leadership change," Douglas Hacker, lead independent director of SpartanNash's board, said in a statement.

SpartanNash's Fresh Kitchen division had also become a drag on the business. The operation, which was supposed to boost the company's prepared foods business, took longer to come online than the company expected and never achieved optimal efficiency. The facility closed down for two weeks in April after the FDA issued a salmonella warning on fresh-cut melon.

The ensuing investigation turned up no evidence of contamination, but the lost business proved very costly, with the company lowering its earnings guidance in May for the first quarter as well as for the year.

SpartanNash hired an outside firm to improve efficiency at the Fresh Kitchen facility, but the guidance clearly didn't improve results enough for the facility to become sustainable. With this, SpartanNash loses a major fresh food asset at a time when perimeter and prepared meals have become sales drivers for grocers.

The retailer-distributor will hope other changes can boost its fortunes. Martin's stores, which count a loyal clientele in Indiana and Michigan, are providing a boost to retail sales. In February, SpartanNash announced Albertsons veteran Lori Raya as its chief merchandising and marketing officer. It's also investing in online shopping, particularly curbside pickup, and in remodeling its stores.