Dive Brief:

• SpartanNash posted net sales of $2.26 billion during the third quarter, down 1.4% from the same period last year, the grocery distributor and supermarket operator announced Wednesday.
• Comparable-store sales moved up 1.2% year over year, while net earnings were up by almost 17%, to $11.1 million.
• SpartanNash has seen its net sales and comparable store sales growth slow during 2023 even as its earnings have turned positive.

Dive Insight:

SpartanNash’s quarterly sales growth turned negative during Q3 after trending steadily downward since the second half of 2022, when the company achieved net sales increases of more than 10% for two quarters in a row.

The company — which hadn’t turned in a quarterly sales decrease since the fourth quarter of 2021, when it saw a 7.1% drop in that measure — attributed the decline to slowing business from Amazon, a key wholesale customer that SpartanNash has come to rely on.

Underscoring the importance of SpartanNash’s relationship with Amazon, the company would have seen its third-quarter revenue grow 1.6% year over year if its sales to Amazon weren’t part of the equation, SpartanNash CFO Jason Monaco told investors Wednesday during an earnings call.

In a positive sign for SpartanNash, Amazon said earlier this week that it is intent on building ties with grocery shoppers, including by making delivery and pickup services more affordable.

SpartanNash President and CEO Tony Sarsam indicated during the call that the grocer is taking steps to nurture its arrangement with Amazon and is hopeful that it will benefit as Amazon’s grocery business evolves.

“[W]e think they’ve got a plan that they’re putting together to get on track and get that business growing again. We’ve met with [them] a handful of times recently to kind of figure out and kind of work through our strategy with them,” Sarsam said. “We have a lot of confidence in the Amazon team, and that they’ll get this business in the right place. And we’re going to be there partnering with them all the way.”

Like its Amazon business, SpartanNash’s retail operations have also been slipping. The company posted a slowdown in its same-store sales growth for the third straight quarter in Q3, bringing its comps to their lowest level since a 2.7% decline in the second quarter of 2021.

Monaco said SpartanNash’s retail operation, which includes just under 150 supermarkets under banners including Family Fare, Martin’s Super Markets and D&W Fresh Market, was hurt during Q3 by continued reductions in EBT benefits. That trend pushed SpartanNash’s same-store sales down by about 3% in Q3 and has gained momentum during the past six months, according to Monaco.

SpartanNash’s net earnings were up year over year in Q3 for the second quarter in a row after declining by that measure for several consecutive quarters.