Q4, FY 2012 Total Sales Dip at Nash Finch

Minneapolis-based Nash Finch Co. reported sales of $4.821 billion for its 2012 fiscal year, a drop of less than 1 percent from prior year, while its sales in the year’s fourth quarter dipped 1.1 percent versus a year ago to $1.136 billion.

The acquisition of 18 No Frills stores during Q3 and 12 Bag ‘N Save stores during Q2 contributed to a net increase in total company sales of $35.4 million for the latest quarter and $95.6 million for the year. After adjusting for these acquisitions, total company FY 2012 comparable sales decreased 2.4 percent compared to prior year.

“We are pleased to see the sales increase in our food distribution and retail segments, which was driven primarily by our retail acquisitions and the investments we made in our food distribution segment marketing programs,” said Alec Covington, Nash Finch president and CEO. “We experienced a decline in sales in our military segment driven primarily by a softness in military export sales. As a result, our total company sales were down slightly. As expected, our gross margin continued to be negatively impacted by lower food price inflation and lower contractual margin rates in our military segment.”

Q4 military segment net sales were $536.8 million, a decrease of 5.3 percent. A larger portion of military sales during the current year have been on a consignment basis, which are included in reported sales on a net basis, the company reported. Accounting for that impact, Q4 comparable military sales decreased 5 percent. For fiscal 2012, net sales were $2.31 billion, a decrease of 1.4 percent including the impact of consignment sales.

“In 2012, we continued our investment in expanding our military footprint to create a world-wide military distribution network, in partnership with Coastal Pacific Food Distributors,” Covington said. “I am pleased that in the fourth quarter several additional military vendors chose our world-wide network to distribute their products to the military.”

The company’s new Landover, Md., distribution center has begun servicing commissaries in the Northeast with non-perishable products. This year, the company will add frozen and chill capability to Landover to make it a full-service distribution center. “With that addition, our military footprint should now be complete,” Covington said.

Combined food distribution and retail segment sales were $598.8 million, an increase of 3.1 percent in Q4 versus prior year period. Because these were acquisitions of distribution customers, these transactions were also responsible for a $46.5 million decrease in distribution segment sales versus Q4 2011. Retail same store sales declined 1.4 percent as compared to the year-ago period.

Total 2012 sales were $2.51 billion, an increase of 0.4 percent over prior year, including a $215.2 million increase attributable to the acquisitions, which also brought a total year $119.7 million decrease in distribution sales. Fiscal 2012 same store sales declined 1.1 percent as compared to the prior year.
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Adjusted Q4 net earnings were $6.4 million or 49 cents per diluted share, compared to $12.7 million or 97 cents a year ago. For fiscal 2012, adjusted net earnings were $39.7 million or $3.03 per diluted share compared to $51.2 million or $3.92 per diluted share in 2011.

“In the fourth quarter, the combined food distribution and retail segment delivered top-line sales performance and we continue to be pleased by our retail acquisitions of the Bag ‘N Save and No Frills supermarkets in the Omaha, Nebraska, market,” Covington said. “In 2013 we are focusing our efforts on sales growth and reducing expenses and are already beginning to see progress. As previously announced by Dollar General, Nash Finch was selected to distribute cigarettes and other tobacco products to Dollar General stores nationally and that project is already underway.”

Nash-Finch’s core businesses include distributing food to military commissaries and independent grocery retailers located in 37 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. The company also owns and operates a base of retail stores, primarily supermarkets under the Family Fresh Market, Econofoods, Family Thrift Center, No Frills, Bag ’n Save, Avanza and Sun Mart banners.