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GRAND RAPIDS, Mich. - Spurred by sales growth in its retail and distribution segments, earnings during the 13-week fourth quarter for Spartan Stores, Inc. here were substantially up, Spartan said yesterday.
The company also reported higher earnings for fiscal 2007, ended March 31, 2007.
Net income rose to $7.2 million, or 34 cents a share, compared with $5.3 million, or 25 cents a share, in last year's 12-week fourth quarter. Spartan's net sales also increased 23.6 percent to $559.5 million from $452.8 million last year.
The extra week in this year's fourth quarter added $42.3 million to consolidated net sales, which the company said was attributable to its acquisition of D&W Food Centers and related pharmacies, 1.4 percent same store sales growth (excluding fuel center sales and the extra sales week), incremental fuel sales, and the strong growth in the distribution segment.
For the fifth consecutive quarter, Spartan's operating earnings improved -- this round by 34.2 percent to $14 million from $10.4 million in the same period last year, due primarily to higher net sales and improved gross margin rates in both the retail and distribution business segments that were partially offset by non-recurring benefits recorded last year.
"We continue to be pleased with our steady business progress and consistently improving financial results," said Craig C. Sturken, Spartan's chairman, president, and c.e.o. "Net sales have improved by at least 12 percent for the past four quarters and operating earnings have grown by double digits in nine of our last 11 quarters."
In addition, Sturken said the company surpassed $80 million in annual EBITDA, which he termed "a milestone for our company."
Fourth-quarter earnings from continuing operations increased 30.6 percent, reaching $7.5 million, or $0.35 per share, compared with $5.7 million, or $0.27 in the same period last year. Earnings from continuing operations for the quarter, including a $0.5 million pretax gain on the sale of real estate, improved substantially despite significantly higher interest expense associated with the company's increased borrowings used to fund its recent acquisitions and the non-recurring benefits realized last year, the company said.
Fourth-quarter retail net sales increased 38.2 percent to $265.7 million from $192.3 million in the same period last year, due primarily to the incremental sales from the acquired retail stores and pharmacies, comparable store sales growth and the extra week of sales which totaled $19.4 million. Excluding the extra week of sales, comparable store sales increased 2.9 percent for the quarter including fuel sales or 1.4 percent excluding fuel sales.
The retail sales growth was partially offset by the previously disclosed closing of two retail stores, which contributed $3.4 million to sales in last year's fourth quarter, and lower net sales at the Company's Pharm retail stores, Spartan said.
"During the year, we expanded our fuel center operations to 10 locations from six in the previous year and increased our distribution customer base by 13 stores," Sturgen said. "In addition, the expansion of our produce distribution capacity in the previous year, led to strong growth in our more profitable produce sales this year. Our progress has significantly strengthened both our retail and distribution competitive market positions.
Spartan recently saids it agreed to acquire the 20-store G&R Felpausch Co. In addition to the Felpausch acquisition, Sturken said he anticipates an increase of Spartan's store base by 43 percent to 107 stores from the 75 stores it operated at the end of fiscal 2004.
"Our recently announced expanded distribution relationship with Martin's Super Markets should provide more than $100 million in incremental sales volume," Sturken added. This relationship is our first major expansion into Indiana."