Stock in Spartan Nash Co. was down by more than 15% early Thursday after the company said struggles in its retail division led to heavy losses in the third quarter loss and annual results likely to be lower than originally anticipated.
The Grand Rapids, Mich.-based company took a non-cash impairment charge of $189 million related to its retail segment as a result of lower than previously estimated operating results. A separate non-cash charge of $35.7million covered impairment and restructuring charges in the third related to efficiency and store closures during the period.
Those charges triggered a net loss of $123.5 million in the quarter, after posting earnings of $16.6 million in the same period a year ago. The company also said it expected to post an annual loss from continuing operations of $2.04 to $2.06 per share, reflecting the impairment charges and cycling a LIFO benefit realized amid rapid deflation in last year’s fourth quarter.
Officials highlighted positive trends amid the gloomy forecast. Led by gains in its distribution segment, consolidated sales improved by 5.9% to $1.9 billion and the company stemmed sales decreases in its military segment. Retail sales fell by 5.2% to $463.6 million, reflecting the closure of three stores and a 2.5% decrease in comparable-store sales.
“Our third quarter results reinforce the progress we have been making on our strategic plan,” David Staples, Spartan’s president and chief executive officer, said in a statement.
Staples said Spartan’s retail stores and customers would soon be benefitting from the Fresh Kitchen facility acquired as part of its Caito acquisition last year. The facility will provide its stores with additional value-added items like fresh-cut fruits and vegetables, ready-made meals, and grab-and-go items. These items will appeal to shoppers more focused on value and convenience.
A recently completed renovation of Spartan’s Forest Hills Foods store in Grand Rapids is providing one such example. The store during the third quarter completed a renovation adding experiential new concepts such as a Smokehouse, a craft beer growler station.
“While not all these concepts will work in every store and every region, we plan to expand these offerings to other stores where they fit with the underlying customer demographics and market demand,” Staples said. “We also believe this will benefit our independent customers as they work to address changing customer preferences.”