SpartanNash Net Sales Grow in Q3

Retailer-wholesaler SpartanNash Co. enjoyed growth in net sales during the third quarter of its fiscal 2018.

Consolidated net sales for Q3, which ended Oct. 6, increased $18.3 million, or 1 percent, to $1.89 billion from $1.87 billion in the prior year quarter. Growth resulted from a 4.6 percent rise in sales in the food distribution segment, partially offset by lower sales in the military and retail segments of 1.1 percent and 3.7 percent, respectively.

Broken down by segment:

Food Distribution

Net sales for the food distribution unit grew $41 million, or 4.6 percent, to $940.2 million compared to the same quarter a year prior. This was mostly due to sales growth from existing and new customer programs.

Military

Net sales for the military segment dropped $5.4 million, or 1.1 percent, to $500.2 million, compared to the period a year prior. This decrease primarily was the result of lower comparable sales at the Defense Commissary Agency-operated locations, partially offset by incremental volume from the private label program and the commissary business in the Southwest obtained during last year's third quarter.

Retail

Net sales for the retail segment were $446.3 million compared to $463.6 million during the quarter a year prior. The decrease in net sales was primarily attributable to lower sales resulting from the closure and sale of retail stores of $15.1 million, as well as a 1.9 percent decrease in comparable store sales, which exclude fuel. These decreases were partially offset by higher fuel sales compared to the prior year quarter.

The company expects continued strong sales growth in food distribution during Q4 and into 2019, and is pleased with the new business development in its food processing and military units, However, improvement in food processing operations is expected to be slower than previously anticipated.

"Within our food and military distribution businesses, heightened transportation and labor costs represent ongoing headwinds as we respond to the pressures facing the industry and continue to experience significant growth in certain regions being disproportionately impacted by these matters," said David Staples, CEO of SpartanNash. "We remain focused on increasing the penetration of our private brand offerings in both our Michigan market and at DeCA. The successful execution of our strategies will include improving our supply chain capabilities, from identifying and capitalizing on freight efficiencies, to managing through tight labor markets in certain geographies, while increasing the acceptance of our private brand products."

Continued Staples: "As we execute the strategies within each of our business segments, we look forward to engaging our associates in our company-wide sales enhancement and cost efficiency initiative, which will commence in the fourth quarter. We remain confident in our ability to execute upon these strategic initiatives and that they will position us to succeed against the current and future demands of our industry as we move through fiscal 2019."

SpartanNash is updating its guidance for the remainder of the fiscal year. Sales-wise, food distribution is expected to continue to grow its top line during Q4, with military sales showing slightly negative comparisons to the prior year, as the company has now cycled the new business obtained in the prior year's third quarter. The retailer-wholesaler does not expect that the new business within the military segment will completely offset the negative DeCA comparable store sales trend.

SpartanNash also expects a sequential improvement in the retail segment comparable sales trend, benefiting from current year store remodels and its brand repositioning, although it now expects to end the quarter negative in its same store sales comparisons.

Grand Rapids, Mich.-based SpartanNash is No. 35 on Progressive Grocer's 2018 Super 50 list of the top grocers in the United States.