SpartanNash sees sales and comp store growth subside in Q3

Dive Brief:

SpartanNash reported $2.06 billion net sales in the third quarter, up 3.1% from the same period in 2019, the grocer reported Wednesday. The increase was down from the 9.4% year-over-year gain in net sales the retailer-wholesaler posted in the second quarter.
The company's retail division recorded a comparable-store sales gain of 10.6% in Q3, a reduction from the 17.1% increase in same-store sales it saw in Q2. Digital sales rose 175%.
SpartanNash’s financial results for Q3, which ended Oct. 3, put it in the company of other food retailers that have also seen the revenue blast they received earlier in the year calm down as consumers have adopted less frenzied shopping behaviors.

Dive Insight:

SpartanNash is turning its sights to its distribution business as its retail operations show signs of slowing down, the company's newly installed president and CEO, Tony Sarsam, said Thursday during an earnings call. Noting that he intends to apply his experience managing supply chains to his new role at SpartanNash, Sarsam, who assumed his job in September, said distribution operations will be the "biggest thrust" of the company's growth and indicated that the grocer will look at possible acquisitions to expand that part of its business.

SpartanNash’s recent agreement with Amazon to let the e-commerce giant buy a minority stake in the company in exchange for sourcing goods from SpartanNash, announced in October, represents a key opportunity for SpartanNash to grow, according to the grocer.

Under the arrangement, the number of shares Amazon will be able to purchase is dependent on how much business it sends SpartanNash's way, and SpartanNash is hopeful that Amazon will maximize the deal, which allows it to buy to $8 billion worth of goods from SpartanNash over seven years, according to the company.

Separately, Sarsam said he intends to make adjustments to SpartanNash’s business selling groceries on U.S. military bases, which saw net sales fall by $47 million to $452 million in Q3, a 9.5% decline.

"It's a long legacy business, and there's a lot of history and pride in serving the military, but the military results are not acceptable," he said. "My broad commitment here is to grow SpartanNash's top line and bottom line, and military has to play and it hasn't, so there will be changes there for certain."