Dive Brief:
- SpartanNash posted lower net and comparable-store sales in the third fiscal quarter of 2024, but the grocery company’s retail sales moved ahead during the period after declining on an annual basis for four quarters in a row.
- Net sales slipped by about half a percent year-over-year, to $2.25 billion, while comparable-store sales were off by 0.7%. Net earnings held steady at 32 cents per diluted share.
- SpartanNash’s acquisition earlier this year of Wisconsin grocery chain Metcalfe’s Market boosted its results during Q3, SpartanNash President and CEO Tony Sarsam said Thursday during an earnings call.
Dive Insight:
SpartanNash is looking to acquisitions to help it accelerate sales against a backdrop of slow grocery industry growth in the areas where it does business, according to executives.
Sarsam said the grocery industry in the markets where SpartanNash operates grew by less than half a percentage point during Q3 — less than half the rate of growth for the U.S. grocery sector overall. That trend held back the company’s retail and wholesale divisions, both of which have been declining for several quarters in a row, he said.
SpartanNash’s retail sales rose nearly 2% during Q3, to $675 million, as incremental sales from the three-store Metcalfe’s chain offset lower consumer demand, according to the company.
Looking ahead, SpartanNash expects to generate $20 million in annual sales from its acquisition of Michigan-based Markham Enterprises, which runs three convenience stores and a fuel business, CFO Jason Monaco said during the earnings call. That deal, announced Oct. 29, is set to close by the end of 2024.
“We are energized by the opportunities within the c-store space, especially due to this channel’s stable demand,” Sarsam said.
SpartaNash has also agreed to acquire 49-store grocery chain Fresh Encounter in a deal expected to close later this month.
Monaco said SpartanNash’s private label penetration during Q3 was “very strong in the high 20 percents.” The company’s Finest Reserve house brand, which launched in February, has shown “really nice progress,” he added.
SpartanNash’s wholesale business, which represents more than two-thirds of its sales, fell 1.6% in Q3, to $1.6 billion, dragged down by a decrease in the company’s sales to Amazon of nearly 3%, Sarsam said.
Sarsam said SpartanNash’s military business remained robust, with sales for the segment up for 11 straight quarters.
SpartanNash updated its guidance for 2024, lowering its profitability expectations but leaving its earlier projection that net sales would come in between $9.5 billion and $9.7 billion unchanged.
