Dive Brief:

• SpartanNash logged a 7.2% year-over-year increase in same-store sales during its first quarter of 2022, which ended on April 23, and saw adjusted earnings per share rise 41% during the period, the grocery distributor and supermarket operator reported on Thursday.
• The grocer reiterated its belief that comp sales growth in its retail division during 2022 will be in the range of 1% to 3%, up from a previous estimate of 0% to 2%, and the company now expects adjusted earnings per share for the year will also be better than it earlier predicted, Chief Financial Officer Jason Monaco said Thursday morning during the earnings call.
• Recently, SpartanNash has been aggressively highlighting its commitment to strengthening its business as it fights activist investors seeking to remake its board of directors against its will.

Dive Insight:

While SpartanNash executives did not address the company’s ongoing proxy battle with activist investors during the call, they used the opportunity to emphatically underscore the company’s achievements ahead of its annual meeting of shareholders, set for June 9.

Minority shareholders led by Macellum Advisors and Ancora Holdings Group are looking to replace three of the company’s 12 board members during a vote at the meeting. The activist investor group, which collectively owns about 4.5% of SpartanNash’s outstanding shares, claims the company “seems to lack any clear strategy for value creation.”

Institutional Shareholder Services, which provides advice to institutional investors and corporations, has endorsed two of the three director nominees Macellum and Ancora are lobbying SpartanNash shareholders to vote for, the activists announced on Tuesday. SpartanNash is urging its shareholders to reject the activists’ slate.

Speaking during the earnings call, SpartanNash President and CEO Tony Sarsam said the company has been focusing on “transforming” its supply chain and saw a year-over-year improvement in throughput of about 7% in Q1.

SpartanNash also achieved more than $15 million in run-rate cost savings during the period, putting the company ahead of schedule in meeting its goal of saving between $15 million and $30 million in that category during 2022, Sarsam said. The grocer reached that “significant milestone” by using insights gleaned from data collected to improve efficiency across its distribution network, he said.

“We’re very pleased with the continued momentum of our performance, which is a direct reflection on the actions we've taken across our business. We believe our strategy provides a clear path for long-term growth and increased shareholder value,” Sarsam said.

Sales of private label products increased 13.7% during Q1 compared with the same period in 2021, faster than its overall sales growth, which came in at 4%, Sarsam said.

Monaco said SpartanNash saw inflation of more than 10% during Q1, with prices in categories including protein and dairy rising the fastest. He said the high inflation rate helped drive up SpartanNash’s net sales during the quarter, adding that the company expects the impact of higher prices on its results will decrease during the second half of 2022. 

Sarsam added that SpartanNash has been successful in increasing the number of people applying for jobs at the company, noting that it saw an applicant flow during Q1 that was 2.3 times higher than normal.