Q2 Sales, Earnings Up at Spartan
Grand Rapids, Mich.-based Spartan Stores Inc. reported consolidated net sales for its fiscal 2014 second quarter of $649.5 million, an increase of 4.5 percent from the year-ago period.
“We are very pleased to deliver sales that were consistent with expectations and to achieve adjusted earnings from continuing operations well ahead of our guidance,” said Dennis Eidson, Spartan’s president and CEO. “Despite a lack of meaningful food inflation, we posted top and bottom line gains in both our retail and distribution segments due to strong execution across our business segments, the effectiveness of our promotion programs and focus on cost control. We will continue to invest in the consumer experience to ensure a broad assortment of brand name and private brand products and encourage sales in our retail and distribution channels.”
The Q2 sales achievement, up from $621.6 million a year ago, is credited to organic growth, contributions from a recent acquisition in the retail segment and new customers in the distribution segment.
Adjusted EBITDA for the quarter ending Sept. 14 increased 10.1 percent to $31.9 million, or 4.9 percent of net sales, compared to $29 million, or 4.7 percent of net sales last year. Adjusted earnings from continuing operations were $12.1 million, or 55 cents per diluted share, compared to $10.2 million, or 47 cents per diluted share, last year.
Q2 adjusted earnings from continuing operations excludes after-tax expenses related to the previously announced merger agreement with Nash Finch Company of $2.3 million, or 10 cents per diluted share, and a tax benefit of $200,000, or a penny per diluted share, due to the favorable settlement of a tax liability established in the prior year.
Net sales for the distribution segment increased 4.7 percent to $271.4 million in Q2 from $259.2 million in the same period last year. The increase in sales was due to organic growth and new business gains, partially offset by the elimination of sales related to the acquisition of a customer’s store in Q3 2013 and lower pharmacy sales.
Net sales for the retail segment increased 4.4 percent to $378.1 million in Q2 compared to $362.3 million in the same period last year. The increase in sales was due to the previously disclosed acquisition of a grocery store and fuel center in Q3 2013, new Valu Land store openings, positive comparable store sales and increased fuel gallons, partially offset by lower retail fuel prices. Comparable store sales, excluding fuel, increased 0.2 percent in Q2.
During Q2, Spartan opened one Valu Land store, completed five minor remodels and store rebadgings and acquired one pharmacy, ending the quarter with 102 corporate owned stores and 30 fuel centers.
Spartan Stores Inc. distributes more than 40,000 private and national brand products to 380 independent grocery locations in Michigan, Indiana and Ohio, and to 101 corporate-owned stores in Michigan, including Family Fare Supermarkets, Glen’s Markets, D&W Fresh Markets, VG’s Food and Pharmacy, Forest Hills Foods and Valu Land.