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MINNEAPOLIS -- Declining retail gross profits prompted Nash Finch Co. here to revise its earnings outlook for 2005 downward.
The food retailer and distributor said Friday it now expects earnings per share for the year in the range of $3.00 to $3.25. Previously, the company had estimated that earnings per share would range between $3.70 and $3.89.
Nash Finch officials said the declining retail gross profit margins at the heart of revised forecast reflect inadequate execution in pricing across the company's retail operations; depressed wholesale gross profit margins, principally relating to manufacturer promotional spending; and higher than expected acquisition integration costs.
"Clearly the acquisition of the Westville, Indiana and Lima, Ohio divisions earlier in the year resulted in a lack of focus in our core business," said Ron Marshall, c.e.o. "We have experienced serious erosion in retail and wholesale gross profit margins, based on issues that we had thought were readily resolvable. Unfortunately, the impact has been deeper than we anticipated and margins will take longer to rebound than we had thought, but these issues are fixable and we are addressing each one of them."
Results for Nash Finch's fiscal '05 third quarter will be released on November 10, 2005. The company reported earnings per share of $1.18 in fiscal 2004.
Nash Finch's core food distribution business serves independent retailers and military commissaries in 28 states, the District of Columbia, Europe, Cuba, Puerto Rico, Iceland, the Azores and Honduras. The company also owns and operates a base of 80 retail stores, primarily supermarkets under the Econofoods, Family Thrift Center, and Sun Mart trade names.