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    Spartan Stores Fiscal '06 1Q Earnings Jump

    GRAND RAPIDS, Mich. -- Overcoming lower sales with expense reductions, Spartan Stores' profit climbed 71 percent in the fiscal first quarter ended June 18, while earnings rose to $2.7 million, or 12 cents per share, from $1.6 million, or 8 cents per share, a year earlier.

    GRAND RAPIDS, Mich. -- Overcoming lower sales with expense reductions, Spartan Stores' profit climbed 71 percent in the fiscal first quarter ended June 18, while earnings rose to $2.7 million, or 12 cents per share, from $1.6 million, or 8 cents per share, a year earlier.

    Revenue declined 3 percent to $459.3 million from $474.3 million, attributable to the disbanding of a joint venture, the closing of one of the company's Pharm discount pharmacies, supercenter competition, a shift of the Easter holiday into the fourth quarter of the prior year, and two distribution accounts' moves to new suppliers.

    Same-store sales declined half a percent, although they rose 3.3 percent at stores that were not affected by the opening of competing stores, according to Spartan Stores, which said its earnings increase was driven by improved profit margins, better use of store labor, and lower depreciation and interest expense.

    "Our earnings growth momentum has continued for the sixth consecutive quarter," said Craig C. Sturken, Spartan Stores' chairman, president, and c.e.o. "The favorable gross margin trends that we were anticipating materialized in the first quarter primarily as a result of the outstanding progress made with our shrink control initiatives. Both our retail and distribution businesses remain fundamentally strong and solidly profitable."

    Sturken said, as expected, "Sales for the first quarter declined, due primarily to events that originated in the prior year or were timing-related, along with the competitive store openings. We remain committed to improving the customer shopping experience by leveraging convenience, keeping stores fresh in physical appearance, and improving our product offerings. In addition, we are pleased to welcome several new distribution customers during the quarter and to have added 27 stores to our distribution segment's sales base," six of which were formerly operated by Farmer Jack.

    The new supply relationships are expected to be fully operational by the end of fiscal 2006's second quarter, which Sturken anticipates will generate approximately $30 million to $35 million in annual sales.

    "The new supply relationships are a testament to the success of our distribution segment's value-added business strategy and the vitality of our existing customer base. These new relationships increased our presence in the state of Indiana and increase our grocery distribution market share in Michigan," said Sturken. "We continually monitor the distribution market dynamics to take advantage of available business opportunities and believe that additional growth opportunities exist despite the more competitive environment."

    Spartan Stores, ranked as the nation's 10th-largest grocery distributor, with warehouse facilities in Grand Rapids and Plymouth, Mich., distributes more than 40,000 private label and national brand products to over 300 independent grocery stores in Michigan. Spartan also owns and operates 54 supermarkets and 19 deep-discount food and drug stores in Michigan and Ohio, including Family Fare Supermarkets, Glen's Markets, and The Pharm.

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