Smart & Final Reports Rough Q1

Smart & Final Stores Inc. took a tumble in its first quarter of fiscal 2017, reporting a net loss and decline in comparable-store sales.

During the period, which ended March 26, the Commerce, Calif.-based company reported a net loss of $4.6 million – $1.5 million adjusted – including the effect of store development expenses and an income tax benefit of $6 million. Comps declined 2.5 percent as a result of deflation, cannibalization and adverse weather. However, net sales were up 6.4 percent to $967 million.

"Our ability to deliver first-quarter net sales growth of 6 percent year over year, despite market conditions and severe weather in our market areas, highlights the effectiveness of our differentiated model as a one-stop shop for our household and business customers, and our unique product assortment of private label, club sizes and high-quality perishables,” said David Hirz, Smart & Final's president and CEO. “In the second half of 2017, we expect deflationary and cannibalization pressures to alleviate, and, with severe weather behind us, anticipate positive comparable-store sales growth and improved financial comparisons."

For the Smart & Final banner, net sales were $765 million, a 7.8 percent rise compared with the $709.3 million posted during the same period a year prior. Comps decreased 2.5 percent during the quarter.

For the Cash & Carry banner, net sales were $202 million, a 1.5 percent rise compared with $199.1 million for the same period a year prior. Comps fell 2.4 percent during the period.

During the quarter, Smart & Final opened two new Smart & Final Extra stores and one new Cash & Carry store. The company is on track to open a total of 19 new stores in 2017.

“Our pipeline of 2017 new stores provides us the opportunity to strengthen our presence in existing market areas, as well as introduce our brands to household and business customers in new communities,” Hirz noted.

Smart & Final operates 308 grocery and foodservice stores under the Smart & Final, Smart & Final Extra, and Cash & Carry Smart Foodservice banners in California, Oregon, Washington, Arizona, Nevada, Idaho and Utah, with an additional 15 stores in northwestern Mexico operated through a joint venture.