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    Q2 Sales Slip at Nash Finch

    Earnings drop 4 cents for second fiscal period

    Minneapolis-based food distributor Nash Finch Co. posted total company sales for the second quarter of 2011 of $1.10 billion, compared to $1.15 billion in the prior year quarter, a decrease of 4.8 percent.

    Excluding the impact of the sales decrease of $18.1 million attributable to the previously announced transition of a portion of a food distribution buying group to another supplier during 2010 and the effect of selling or closing eight retail stores, total company comparable sales decreased 2.5 percent relative to last year.

    Sales for the first 24 weeks of 2011 were $2.20 billion compared to $2.33 billion in the prior year period, a decrease of 5.8 percent. Excluding the impact of the sales decrease of $52.6 million attributable to the previously announced transition of a portion of a food distribution buying group to another supplier during 2010 and the effect of selling or closing eight retail stores, total company comparable sales decreased 3.1 percent relative to last year.

    “We remain well positioned with a solid balance sheet which will allow us to continue to invest in our business to drive shareholder value,” said Alec Covington, Nash Finch president and CEO.

    Net earnings for the second quarter 2011 were $10.1 million, or 77 cents per diluted share, as compared to net earnings of $10.7 million, or 81 cents per diluted share, in the prior year quarter. Net earnings for the first 24 weeks of 2011 were $17.5 million, or $1.35 per diluted share, as compared to net earnings of $18.7 million, or $1.40 per diluted share, in the same prior year period.

    Military segment net sales increased 2.6 percent in the second quarter 2011 and 1.1 percent in the year-to-date 2011 period compared to the prior year. However, a larger portion of military sales during the current year have been on a consignment basis, which are not included in reported net sales. The year-over-year increase in consignment sales was approximately $2.5 million during the quarter and $8.2 million in the year-to-date period. Including the impact of consignment sales, comparable military sales increased 3 percent in the second quarter 2011 and 1.8 percent in the year-to-date 2011 period compared to the prior year.

    “Over the past few years, we have focused our capital investments on the military side of the business,” Covington said. “The continued strength of that business shows our investments were well made. Not only do our military associates do an exemplary job of serving our military heroes at home and abroad, their efforts are invaluable in helping our company to deliver an appropriate return to our shareholders.”

    The combined food distribution and retail segment sales decrease in the second quarter and year-to-date periods of 2011 compared to the 2010 periods was 10.7 percent and 11.4 percent, respectively. The decrease in sales was negatively impacted by the previously announced transition of a portion of a customer buying group to another supplier during the second quarter 2010. However, after adjusting to exclude this sales impact of $18.1 million and the sale of four and closing of four retail stores, sales declined 6.9 percent for the second quarter and 6.7 percent year-to-date. Retail same-store sales declined 3.7 percent as compared to the prior year quarter and 3.3 percent in the year-to-date comparison.

    “While the top line continues to be a challenge in the current environment, we continue to focus our efforts on profitability enhancements driven principally through improvements in inventory management and overall productivity,” Covington said.
     

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