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MINNEAPOLIS -- Nash Finch Co. here said a fourth-quarter loss of $26 million was due to a large jump in pretax charges and a drop in sales.
The $26 million, or $1.96 per share, loss for the period ended Dec. 30, 2006 compared unfavorably with profit of $13.5 million, or $1.01 per share, a year ago. Results included pretax charges of $38.9 million, or $2.49 per share, vs. pretax charges totaling $3.8 million, or 17 cents per share, in 2005, the company said.
Revenue slipped 2 percent, to $1 billion from $1.12 billion, attributable to the closing of underperforming retail stores, slower growth in new accounts, and customer attrition, Nash Finch said.
For the full year, the company posted an increase in sales of $4.7 billion, compared with $4.5 billion in fiscal 2005, a gain primarily attributable to its acquisition of distribution centers in Lima, Ohio and Westville, Ind., and stronger sales in the military segment. The gains were partially offset by a decline in retail-segment sales, associated with the closing of underperforming stores.
Sales for the fourth quarter of 2006 declined slightly to $1 billion, vs. $1.1 billion in the prior-year quarter, as a result of closing of underperforming retail stores, slower growth in new accounts, and customer attrition in the food distribution segment; partially offset by stronger sales in the military segment.
In November 2006 Nash Finch announced a new strategic plan designed to enhance its market focus and provide a strong platform to support growth initiatives. In the near term, the wholesaler said its focus is on stabilizing the business through improving processes that will enhance new business development methods, improve productivity levels, and ensure more effective management of gross margin.
"As I mentioned last quarter, Nash Finch is in a period of transition," said Alec Covington, president and c.e.o. "These steps are designed to return Nash Finch back to an acceptable level of profitability and to ensure long-term success. Our strategic plan, with its strong emphasis on delighting consumers by creating focused businesses and retail formats, will place us on the path to achieve our goal of becoming the food distributor of choice and to increase overall shareholder value."
Covington also said he is confident that the new management team put in place in the fourth quarter, with the return of Christopher Brown as e.v.p./food distribution and Bob Dimond as e.v.p./c.f.o./treasurer, will also help the company achieve its near- and long-term goals.
As a vote of confidence in Covington, the company's board of directors' compensation committee amended his employment agreement to include restructuring the terms of a stock grant made at the time of his hiring, and to fully vest Covington's supplemental executive retirement account. The company further entered into a new change-in-control agreement with Covington that delivers a greatly reduced compensation in the event a change in control occurs.
Through the new agreement, Covington will be granted a total of 152,500 restricted stock units (RSUs) under the company's 2000 Stock Incentive Plan. The previous grant included a cash "tax gross up" payment which is not included in the new grant. At Covington's request, the new grant delivers additional equity in lieu of the cash "tax gross up" payment. The new RSU grant replaces a previous grant of 100,000 performance units awarded Covington when he joined the company last year. The previous grant has been cancelled.
"It has been my intention from day one to be a stockholder, not a trader of Nash Finch Company equity," said Covington, "and I believe my agreement to defer delivery of these shares until six months after the termination of my employment demonstrates my desire to align firmly with shareholder interest and to create long-term value."