SpartanNash reported consolidated net sales increased 6% to $2 billion for its 14th consecutive quarter of growth, and profitability was in line with expectations, said Dennis Eidson, chairman, interim president and CEO, who put his retirement on hold to step in after the resignation of Dave Staples in August. A search for a permanent CEO is underway.
To remain aligned with its core business, SpartanNash announced last quarter that it was exiting the Fresh Kitchen business. During the earnings call, Eidson said the company plans to sell the Fresh Kitchen facility as early as the first quarter of fiscal 2020. “We believe this transition better aligns with titles past operational expertise and will enable us to improve quality and efficiency,” he said.
Retail store comps also returned to positive, keeping the organization on track to achieve more than $20 million in annual run-rate savings. Retail sales were driven in large part by the relaunch of the Family Fare banner in western Michigan and the acquisition of Martin’s Supermarkets last year.
Eidson also attributed the positive store comps to bringing Lori Raya on board as chief marketing and merchandising officer this year. “She brought a lot of insights from her past,” Eidson said. “I think she is applying those to our business. I give Lori credit for that.” He said the company was also aggressive on the promotional front, including using social media to help drive comp-store sales.
“Strategically, I think we're well-positioned as a company in both that distribution and retail segment, and our focus is on the execution going forward,” Eidson said. He noted that SpartanNash has been working to bring down costs on the supply side of the business by moving away from contracting third parties and hiring drivers directly for distribution, which can bring costs down 20% to 30% per mile. Earnings for food distribution in the third quarter totaled $11.7 million compared to $19.8 million in the third quarter of fiscal 2018, primarily due to higher administrative expenses related to the transition costs as well as higher supply chain costs.
Sales expectations for the current fourth quarter are in the low to mid-single digits.