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MINNEAPOLIS--Nash Finch here saw profits dip steeply in the first quarter of 2006, the company said early this morning. It blamed higher costs of goods and other expenses for the shortfall.
Nash Finch said profits were $3.9 million, or 29 cents per share in the latest quarter, down from $7 million, or 54 cents, in the year-ago period. Reuters reported that the earnings fell short of analysts' estimates, which were 60 cents a share.
Total sales for first quarter were $1.04 billion, up from $882 million in the year ago period, which Nash Finch said reflected its acquisition of two DCs from Roundy's Supermarkets, effective March 31, 2005.
Food distribution segment sales increased 38 percent to $621 million, compared to $450 million; again the DCs acquired from Roundy's made the difference. Apart from the impact of that acquisition, food distribution sales were slightly down, which Nash Finch attributed to the late timing of the 2006 Easter holiday and holiday-related sales.
Food distribution segment profits were up 12 percent to $17.8 million, from $16 million in the same quarter last year. Segment profit margins did drop in the quarterly comparison, however, which Nash Finch blamed on more of its distribution business coming from larger and non-traditional customers, "wherein margins are lower." It added, "costs associated with integrating the acquired distribution centers continued to negatively effect margins."
Military distribution segment sales for the quarter were essentially flat, at $263 million, with sales increases at domestic commissaries and exchanges offset by decreased sales to overseas commissaries.
Corporate retail sales were $151 million, versus $168.3 million, due to the closure or sale of stores. Same store sales dipped 4 percent in the quarterly comparison, while profits from the retail segment sagged to $4.3 million, compared with $5.7 million, "the result of the very competitive retail environment, the timing of the Easter holiday and the closure or sale of stores," Nash Finch said. Store count at the end of the first quarter of 2006 was 71 compared to 78 at the end of fiscal 2005.