Spartan Stores distributes strong sales in Q1
GRAND RAPIDS, Mich. — Grocery distributor and retailer Spartan Stores reported that its net sales for the first quarter increased 4.4% to $602.6 million compared with $577.2 million in the same period last year. Both the distribution and retail segments reported improved sales during the quarter, the company said.
First-quarter operating earnings increased 4.9% to $14 million compared with $13.3 million in the year-ago period. Net earnings for the first quarter of 2012 were $6 million compared to $6 million last year. Excluding the previously mentioned one-time, non-cash income tax charge in the current year and the pre-tax items associated with the warehouse consolidation initiative last year, adjusted net earnings increased 2.7% to $6.5 million, or 29 cents per diluted share, compared with $6.4 million, or 28 cents per diluted share, in the first quarter of fiscal 2011.
“We are pleased that our first quarter fiscal 2012 financial performance was in line with our expectations,” stated Dennis Eidson, Spartan’s president and CEO. “We achieved year over year sales growth for the third consecutive quarter in our distribution segment while continuing to enhance our value proposition to the consumer and tightly managing the controllable aspects of our business which resulted in improved profitability in our retail segment.”
Spartan reported that net sales at its distribution segment increased 4.8% to $257.1 million from $245.3 million in the year-ago period due to new customers, improvement in pharmacy related sales and increased sales to existing customers.
Operating earnings for the segment decreased 7.3% to $7.4 million compared to $8 million in the same period last year. Adjusted for the prior year net restructuring costs, operating earnings were $7.4 million this year compared with $8.5 million last year.
First-quarter net sales for the retail segment increased 4.1% to $345.4 million compared with $332 million in the same period last year. The higher sales were due primarily to increased fuel retail selling prices and volume, partially offset by a decline in comparable store sales, excluding fuel, of 0.9%.
Retail segment operating earnings for the quarter increased 23% to $6.6 million compared with $5.4 million in the year-ago period. The increase in operating earnings was attributed to lower health care expenses and benefits from cost containment initiatives, partially offset by increased debit/credit card fees.
“The Michigan economy has shown some improvement from its previous lows to a more stable level. However, this improvement has been mitigated by higher fuel prices which impacted consumers’ discretionary income and an uptick in the unemployment rate over the last two periods of the quarter. Looking forward, we continue to expect comparable store sales to turn positive in the second half of the year as we benefit from cycling fiscal 2011’s competitive store activity, we continue to execute our capital investment program, we rollout our loyalty program across the remaining banners and the economy continues to experience inflation. As a result, we remain cautiously optimistic about our operating outlook and expect continued improvement of our key financial metrics in fiscal 2012,” concluded Eidson.
The company expects that the second quarter distribution sales growth and retail comparable-store sales rate, excluding fuel, will be comparable to the first quarter of fiscal 2012. The company expects fiscal 2012 second-quarter adjusted net earnings to approximate last year’s adjusted performance. Excluding the 53rd week in fiscal 2012, the company continues to expect comparable-store sales to turn positive in the second half of the year. For the full fiscal year, the company anticipates that adjusted net earnings, excluding the 53rd week, will modestly exceed fiscal 2011’s.
Spartan Stores currently distributes more than 40,000 corporate and national brand products to approximately 375 independent grocery stores in Michigan, Indiana and Ohio, and to its 97 corporate-owned stores located in Michigan, including D&W Fresh Markets, Family Fare Supermarkets, Glen’s Markets and VG’s Food and Pharmacy.