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New customer additions and recent acquisition fuel growth helped Nash Finch post a 13.5 percent first-quarter sales gain of $1.14 billion, from $1 billion in the prior-year quarter during the 12-week period ended March 28, 2009. Excluding the impact of the sales increase of $112 million attributable to the acquisition of three military distribution centers at the end of January, total company sales increased 2.4 percent relative to last year. The Minneapolis distributor said the first quarter of 2009 was negatively affected by the shift of Easter to the second quarter in 2009 from the first quarter in 2008, which created a sales variance in the first quarter of about $8.4 million, or 0.8 percent. Excluding the impact of the acquired distribution centers and the Easter shift, comparable sales increased 3.2 percent.
Alec Covington, Nash Finch’s president/CEO, said the company’s comparable-sales increase of 3.2 percent in the first quarter “reflects the stability of our three business segments despite the very challenging economic conditions that our country is facing. The recent acquisition of three distribution centers previously operated by GSC Enterprises of Texas is already having a positive impact on our results. Integration plans are ahead of schedule.”
Meanwhile, Nash Finch’s net earnings for the first quarter of 2009 were $14.4 million, or $1.08 per diluted share, vs. $10.6 million or 80 cents per diluted share, in the prior-year quarter, while consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2009 was $29.2 million, or 2.6 percent of sales vs. $30.6 million, or 3 percent of sales for the prior-year quarter. The company said the slight reduction in consolidated EBITDA was largely attributable to higher-than-normal inflationary inventory gains last year that were largely offset by improvements in its military segment and overhead expense reductions accomplished during the most recent quarter.
Further, the increase in first-quarter 2009 food distribution segment sales vs. the comparable 2008 period was primarily attributable to new account gains, which was in turn offset by the shift of Easter to the second quarter 2009 vs. the first quarter in 2008, resulting in a sales variance in the first quarter of about $7 million, or 1.2 percent, to last year. Excluding the impact of the timing of the Easter holiday, food distribution sales increased 2.5 percent relative to last year.
Food distribution segment EBITDA also decreased by 17.2 percent in the first quarter of 2009 vs. the same period last year, a decline that Nash Finch said is partially due to high inflation in the previous year, resulting in higher-than-normal prior-year gross margin performance. In addition, declines in commodity prices in the current year have also temporarily affected gross margin performance.
With a number of cost containment measures being implemented in the first quarter across the company, Covington said Nash Finch is “proceeding with our strategic initiatives, which are aimed at growing sales and increasing operational efficiencies.” However, he added, “We are delaying some of our 2009 capital expenditures to ensure we are able to reduce our debt levels in line with our forecast for the remainder of the year. As we have done in the past, we will continue to demonstrate prudent balance sheet management with a strong bias toward maintaining plenty of liquidity.”