Grand Rapids, Michigan-based SpartanNash, which saw same-store sales increase 6.5% during the second quarter, is embarking on a “merchandising transformation,” the company announced Thursday.
The merchandising initiative, which seeks to deal with rising food costs, will focus on improving category management, upgrading merchandising capabilities, and automating promotions and pricing, CEO Tony Sarsam told analysts.
The merchandising transformation is expected to cost between $11 million and $14 million.
“Everybody is feeling the pinch,” Sarsam said.
Added CFO Jason Monaco, “It’s the squeeze of inflation that’s continuing to be a challenge for consumers. And it’s really the impetus and the catalyst for us doubling down and driving this merchandising transformation.”
SpartanNash executives said they would reveal more details about the initiative during an investor day presentation November 2.
The company has several channels, including distribution, wholesale and retail, operating 147 supermarkets in nine states under the banners of Family Fare, Martin’s Super Markets and D&W Fresh Market. It also supplies U.S. military commissaries and exchanges.
In June, SpartanNash said it had quashed a group of activist investors, led by Macellum Advisors and Ancora Holdings Group, as it sought to replace three of the company’s board members with their own nominees.
For the quarter ended July 15, SpartanNash reported net sales of $2.3 billion, up 7.9% from the year before. Net earnings, however, were just $5.1 million, a nearly 70% drop from the year before.
“Over the past year, product cost increases have outpaced underlying commodity price changes in many categories,” Sarsam said. “Our team has been actively tracking these trends and industry data. We have always had a robust process for negotiating price, but we are doubling down on these efforts due to the unprecedented inflation.”
The company has been working to make its supply chain more efficient and said Thursday it’s seen a 9% improvement in throughput rate year over year.