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SpartanNash eyes acquisitions as it looks for new growth areas

BY Friday, August 19, 2016 09:07am

BYRON CENTER — Grocery retailer and distributor SpartanNash Co. appears to be ready to go on the hunt for more acquisitions.

Speaking yesterday during a quarterly conference call with brokerage analysts, executives with the Byron Center-based SpartanNash (Nasdaq: SPTN) said that modest growth in the company’s food distribution and military segments allows it to explore new areas for expansion.

“With a strong balance sheet, we will also proactively pursue financially and strategically attractive acquisition opportunities,” CEO Dennis Eidson said in the call.

Executives noted that SpartanNash completed its expansion into the Omaha, Neb. market last quarter with the renovation and rebranding of eight retail stores.

Additionally, the company touted its continued rollout of Open Acres, a private label brand for “fresh products.”

Executive vice president and COO David Staples told analysts that after piloting the brand in Michigan, SpartanNash broadened its reach in the second quarter and will continue to do so.

“We will continue to expand our product offerings with fresh chicken and other proteins in the third quarter,” Staples said. “This new brand has been well received and closes the gap in our portfolio of private brands that existed in our non-Michigan footprint.”

SpartanNash executives previously cited online sales and distribution from Inc. as a new channel where it hoped to grow, but they were mum on the impact of that business in yesterday’s call.

In a followup email to MiBiz, SpartanNash Vice President of Corporate Affairs and Communications Meredith Gremel declined to discuss the Amazon deal specifically, saying the company doesn’t detail sales trends in individual areas of the business.

“SpartanNash generated sales growth over last year mainly due to new accounts in our core business as well as growth in alternative channels,” Gremel said.

While executives kept a fairly positive tone, SpartanNash’s earnings showed mixed results.

The company reported that net sales for the quarter, which ended on July 16, grew 1.8 percent in a “deflationary environment,” with revenues jumping from $1.8 billion to $1.83 billion compared to the same quarter last year.

However, operating earnings dipped 11.4 percent to $32.6 million compared because of higher restructuring costs and asset impairment charges, according to a statement from the company.

The company said adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was $58.7 million, or 3.2 percent of net sales, compared to $58.5 million, or 3.3 percent of net sales in the same period a year ago.

“With current market headwinds and economic conditions likely to persist, particularly in our western geographic areas, we remain focused on operating our business with a disciplined approach,” Eidson said in a statement. “We will continue to implement our initiatives to enhance our merchandising, pricing and promotional strategies, including expanding our organic and private brand product offerings, improving our produce offering, and driving greater customer engagement through our loyalty program.”

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