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Spartan Stores tabbed another straight quarter of strong growth during the 12-week period ended Sept. 13, 2008, with second-quarter operating earnings increasing 17 percent to a record high $22.5 million from $19.3 million in the same period last year.
The operating earnings include $0.7 million in start-up and promotional costs related to remodeling activity, while last year's second quarter included $0.3 million of costs related to the Felpausch acquisition.
Spartan's net sales for the second quarter also grew 5 percent to $627 million from $598 million in last year's second quarter, buoyed by incremental fuel sales, same store sales growth of 4 percent and higher distribution sales to new and existing customers.
The company expects comparable retail store sales to increase in the low single digits during the second half of fiscal 2009 due to the cycling of remodeled and relocated stores and absence of Easter holiday sales in this year's fourth quarter.
Dennis Eidson - who officially took the helm as president/c.e.o. Wednesday following a previously announced plan to succeed Craig Sturken, who will stay on as executive chairman of the board and work on business strategy - spoke appreciatively of the company's solid sales and profit growth during the challenging economic climate.
"Our second-quarter operating earnings reached an all-time high, and net sales improved for the tenth consecutive quarter, demonstrating the effectiveness of our business strategy, execution abilities and the dedication of our management team and associates," said Eidson. "We are also very enthused about our recently announced acquisition agreement [of VG's], a premier retail operator with 17 retail stores and 15 in-store pharmacies" [that will] expand our retail store base by 20 percent...[that will] provide us with a strong platform for future growth."
Upon completion of the transaction, Eidson said Spartan we will retain the VG's name and maintain a regional office to support these operations.
Spartan's second-quarter earnings from continuing operations also rose 46 percent, to $12 million, or $0.55 per diluted share, vs. $8.3 million, or $0.38 per diluted share, in the same period last year. Last year's second quarter included a $2.7 million non-cash income tax charge related to the previously disclosed change in Michigan's state business tax structure.
Spartan's net sales in the distribution segment also increased 3.2 percent to $303 million from $294 million in the same period last year as a result of incremental sales volumes to new and existing customers and product cost inflation.