SpartanNash sees higher sales, lower profits in mixed Q2
Growing expenses cut into SpartanNash profits even as sales increased in the second quarter of fiscal 2022.
The grocery retailer/distributor reported net sales of $2.3 billion, an increase of 7.9%, compared to $2.1 billion in the prior-year quarter. Net earnings totaled $5.1 million, down 70% from $16.8 million in the prior year quarter. Retail comparable sales increased 6.5% for the quarter.
The growth in net sales compared to the prior fiscal year was driven by net sales increases in all three segments, each of which were favorably impacted by inflation. Additionally, case volume increased 3.3% within the retailer’s military segment.
Higher corporate administrative costs and taxes, as well as increased interest expense and lower margins, all contributed to the decline in net earnings even as net sales increased. The company also continued to make additional progress on its supply chain transformation plan, concluding the quarter with a 9% improvement in throughput rate year-over-year.
During the quarter, SpartanNash named Greg Crane, an executive with more than 15 years of finance and operational management experience, to the role of VP, finance – food distribution.
Second quarter segment financial results
Food Distribution
Net sales for food distribution increased $61.8 million, or 5.9%, to $1.12 billion from $1.06 billion in the prior-year quarter. The increase in net sales was due primarily to the inflationary impact on pricing.
Retail
Net sales for retail increased $52.4 million, or 8.5%, to $672.4 million from $620.0 million in the prior year quarter, primarily due to inflationary pricing and share gains. Retail comparable store sales increased 6.5% for the quarter.
Military
Net sales for military increased $53.1 million, or 12.4%, to $483.2 million from $430.1 million in the prior year quarter. The increase was primarily related to inflation and an increase in case volume.
Based on its strong performance to date and the success of its supply chain transformation, SpartanNash is raising its full-year outlook for the second time this year. For fiscal 2022, SpartanNash expects total net sales in the range of $9.3 to $9.6 billion and adjusted EPS between $2.17 and 2.32.
"We are pleased with the significant momentum in our business as evidenced by our strong second-quarter results, including impressive gains in sales and profits," said SpartanNash president and CEO Tony Sarsam. "These results were driven by our continued turnaround in the Military business and the margin improvements across our distribution businesses. With the launch of our merchandising transformation, we are doubling down on our efforts to maintain price competitiveness in this highly inflationary environment. We believe that when the end consumer wins, we all win."
The core businesses of SpartanNash include distributing grocery products to independent and chain retailers, its corporate-owned retail stores, and U.S. military commissaries and exchanges. The company also operates a fresh produce distribution network and the Our Family brand. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Iraq, Kuwait, Bahrain, Qatar, and Djibouti. The company owns 145 supermarkets—primarily under the banners of Family Fare, Martin's Super Markets, D&W Fresh Market, VG's Grocery, and Dan's Supermarket.