Smart & Final Returns to Positive Comps Growth in Q2

Smart & Final Stores has reported a return to positive comparable-store sales during its second quarter of fiscal 2017, following several difficult quarters squeezed by food deflation and increased competition.

During Q2, which ended June 18, net sales rose 3.9 percent to $1.08 million, compared to $1.04 million during the same period in 2016, driven by a 1.3 percent growth in comps. The increase in comps was attributable to a 1.9 percent rise in comparable- transaction count, partially offset by a 0.6 percent decrease in average transaction size, including the effect of cannibalization from new stores.

This return to positive comps growth reflects the dampening pressures from deflation and growth-related sales cannibalization, as well as from customer growth attributable to the retailer’s “strong competitive position,” said David Hirz, president and CEO of Smart & Final. Sales growth is anticipated to continue being supported by the maturation of new stores opened over the past two years, as well as marketing and promotional initiatives aimed at increasing store traffic and building basket size.

Added Hirz: "Smart & Final is well known for meeting the needs of both business and household customers with quality warehouse-club-sized and private label products, plus a unique assortment of items for small businesses.  We have a differentiated position in our value-priced and convenient stores with strong digital capabilities.  With a broad range of online and delivery options to serve our customers, Smart & Final is well positioned for continued success in an evolving marketplace."

For the Smart & Final banner, net sales were $836.1 million during the period, a 3 percent increase from $811.8 million for the same period a year prior. Comps grew 1.2 percent.

For Cash & Carry stores, net sales were $242.2 million, a 6.9 percent rise compared with $226.5 million during the same quarter in 2016. Comps rose 1.8 percent.

For the period ending June 18, operating and administrative expenses were $143.1 million, a 3.1 percent increase over the same period a year prior, primarily due to expenses associated with the 31 new stores that opened beginning in Q2 2016 through the end of Q2 2017. Adjusted net income was $11 million, compared with $15.5 million during the same period in 2016.

During Q2 2017, Smart & Final opened four new Smart & Final Extra! stores, completed the conversion of a legacy Smart & Final store to the Extra! format, and relocated one store. The company also opened one new Cash & Carry store.

Based in Commerce, Calif., Smart & Final operates 313 stores, including 180 Smart & Final Extra! stores, 72 legacy Smart & Final stores, and 61 Cash & Carry stores.

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