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Spartan Stores, Inc. posted higher fourth-quarter profits from last year, helped in part by higher retail segment sales, including incremental sales from the acquisition of VG's Food and Pharmacy stores and a 1.2 percent increase in same-stores sales (excluding fuel sales and the Easter holiday last year).
The Grand Rapids, Mich.-based company’s profit gains, however, were partially offset by lower sales in the distribution segment due primarily to the elimination of distribution sales to the acquired VG's stores and a decrease in the marginally profitable pharmacy distribution program sales.
Spartan also saw its net sales for the 12-week period increasing to $581 million from $571 million vs. last year's fourth quarter, while fourth-quarter operating earnings were up 14 percent to a record $17 million, from $15 million in the same period last year. Spartan’s retail net sales also rose 21.5 percent to $332 million, from $273 million, while distribution segment sales declined to $249.2 million, from $298 million in the preceding year quarter.
"We are pleased to report these very positive results during such a challenging economic period," said Dennis Eidson, Spartan's CEO, adding that the company remains “satisfied with the performance of our retail supermarkets, particularly the steady performance of those that have recently been remodeled or relocated as part of our capital investment program. This marks our 11th consecutive quarter of retail comparable-store sales growth…[and the] distribution segment's 14th consecutive quarter of operating earnings growth."
The company also posted Q4 net earnings if $9 million, or 41 cents per share, up from $8 million, or 37 cents per share, in the prior-year quarter, while earnings from continuing operations rose to $9 million, or 40 cents per share, from $8 million, or 36 cents per share, in the year-ago quarter. As a percentage of sales, gross profit margin increased 240 basis points to 23 percent, from 21 percent in the previous-year quarter, due to an increase in the mix of higher-margin retail sales.
In the current year, Eidson said Spartan will continue focusing “on our consumer-centric strategy and closely monitor the state and condition of the current business cycle. We are a nimble organization and have demonstrated our ability to anticipate and respond to changes in consumer purchasing habits by making tactical adjustments to our marketing and merchandising programs.”
Edison said the company’s customer loyalty card pilot program in one of its northern Michigan markets is expected to be rolled out to all of its Glen's stores by the end of the second quarter. “We currently do not have a loyalty card program in any of our stores and believe that it will provide us with even greater insights about our customers' purchasing behavior and allow us to develop more targeted merchandising and marketing programs,” he explained. “We will also continue looking for prudent strategic growth opportunities and, due to our sound financial condition, are well positioned should opportunities arise.”
Noting that the weak economic cycle is likely to continue for the majority of fiscal 2010, Eidson said Spartan’s near-term position is “cautious, but opportunistic. We expect to continue making meaningful progress with our capital investment program and the acquisition integration.”