Dive Brief:

• SpartanNash reported fourth-quarter earnings for fiscal 2018 of $0.32 per share, which came in six cents below analysts' expectations. The wholesaler/retailer’s consolidated net sales came in at $1.9 billion, a 0.6% increase year-over-year.
• Sales in company's food distribution segment grew 4.7%, to $954.4 million due to sales in new and existing categories. Its retail division saw net sales drop 4.6% to $429.1 million, while comp-store sales declined 1.9%.
• SpartanNash reported a drop in gross profit of $254.4 million from $254.8 million the year prior, as well as an increase in operating expenses which came in at $257.2 million, or 13.6% of net sales compared to $236 million, or 12.5% of net sales last year. The company also saw an operating loss off $11.9 million compared to operating earnings of $18.8 million in Q4 2017.

Dive Insight:

Due to headwinds in the business, including a previously disclosed non-cash payment and rising transportation and warehousing costs, SpartanNash executives said positive growth in its top-line business wasn't able to translate to bottom-line growth.

Moving forward, the company is focused on controlling costs while investing in promising retail and distribution opportunities. In December, it rolled out Project One Team, an initiative that combines supply-chain savings, technology enhancements and investments in the products and services it offers retail customers. Savings over the next two years are estimated at $15 million.

"We are excited to see this initiative empowering our associates at all levels to drive sustainable improvements in our business as we take full advantage of the growth opportunities we expect to see over the next one to two years," David Staples, SpartanNash's president and chief executive officer, said in a statement. 

The company has also made a few additions to its management team. It recently hired Albertsons’ veteran Lori Raya to lead its merchandising and marketing efforts and named Arif Dar its chief information officer. Raya will be charged with enhancing SpartanNash's private label products for its retail customers while also driving sales in its growing retail division. Dar, meanwhile, brings strong international CPG and supply chain experience to his role, the company said.

Fiscal 2018 has been quite the year for SpartanNash as it is coming off of a now-closed acquisition of Martin’s Super Markets, the negative impact of Hurricane Florence on its distribution centers, new additions to its management teams and the romaine lettuce recall.

In an earnings call this morning, company leadership cited the hurricane, which struck in late August, as the reason for many returned orders from customers due to late arrivals and being overwhelmed due to an increase in demand. During the romaine lettuce outbreak that occurred late last year, the retailer tossed all romaine lettuce in all of its stores. SpartanNash says the incident cost the retailer one to two cents per share in Q4.

The company did not disclose more information about the progress or effects of its Martins acquisition. “It’s a bit too early to be communicating anything even though we’ve seen a lot of progress,” Staples said during the earnings call. However, company executives did mention they are happy with Martin’s operations during this seven-week period and sales have stayed in line with what was expected.