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A lawsuit settlement and greater sales from its military segment helped Nash Finch nearly triple its third-quarter profits alongside a 15 percent gain in sales during the 16-week period ended Oct. 10, 2009.
The Minneapolis-based distributor and retailer posted total sales of $1.6 billion vs. $1.4 billion in the prior-year quarter. Excluding the impact of the sales increase of $229 million attributable to the acquisition of three military distribution centers on Jan. 31, 2009, sales decreased by 0.9 percent vs. last year, primarily because of price deflation. Sales for the first 40 weeks of 2009 were $4 billion vs. $3.4 billion in the prior-year period, an increase of 15.8 percent. Excluding the impact of the sales increase of $508.4 million attributable to the acquisition of the three military DCs on Jan. 31, 2009, total company year-to-date sales increased 1.1 percent.
Meanwhile, Nash Finch also saw third-quarter profits nearly triple to $22 million, or $1.64 per share, from $7.7 million, or 58 cents per share, in the same period last year due to a gain from a lawsuit settlement and greater military segment sales. In the third quarter of last year, the company recorded a charge of 45 cents per share to account for inventory.
“In light of having to maneuver through a very challenging economic environment, I am pleased with our third-quarter performance,” said Alec Covington, Nash Finch’s president and CEO. “After excluding the litigation settlement gain and the other significant items identified, our results were generally in line with our expectations, with both consolidated EBITDA and EPS coming in ahead of last year.”
Although Nash Finch’s food distribution sales fell 3 percent to $818 million and its retail revenue fell 4 percent to $178 million, the company’s military distribution revenue climbed 63 percent to $63 million after the acquisition of the three military DCs in January.
“Our food distribution segment experienced a decrease in year-over-year sales primarily due to significant price deflation in our inventories, which was passed in the form of lower prices to our independent customers,” said Covington, noting that in contrast, the distributor’s military and retail segments posted solid results as a result of controlling and reducing SG&A expenses.
“We are committed to maintaining a strong balance sheet and are focused on improving working capital, debt reduction and prudent cost containment in this challenging economy”, said Mr. Covington. “As we look towards the rest of the year and into 2010, we remain committed to our strategic initiatives, which are centered on adding new food distribution customers, improving the efficiency of our food distribution and military supply chain networks, and making our warehouse operations more productive.”
Having additionally declared a quarterly dividend and a stock buyback plan, Nash Finch promoted Kathleen M. Mahoney, previously SVP, general counsel and secretary, to the positions of EVP, general counsel and secretary.
“Kathy has proven not only to be a brilliant legal mind, but also a critical business partner, and has played a significant role in the development and implementation of our strategic plan over the last several years,” said Covington, noting that Mahoney’s “extensive legal background and consistent track record of contributions at Nash Finch have been invaluable.”
Mahoney, who joined the company in 2004 as VP, deputy general counsel, was formerly managing partner in the St. Paul Office of Larson King, LLP, and earlier spent 13 years with a law firm. She also spent six years as special assistant attorney general in the Minnesota Attorney General’s Office.