Third-quarter results were inconsistent for SpartanNash, as the food solutions company on Thursday reported year-over-year declines in wholesale and comparable store retail sales. However, two recent acquisitions could help bolster both ends.
The recently based Byron Center, Michigan company purchased Fresh Encounter, which includes 49 retail grocery stores in Ohio, Indiana and Kentucky, and Markham Enterprises’ three fuel centers and convenience stores in Michigan.
During SpartanNash’s call with investors Thursday, Jason Monaco, executive vice president and chief financial officer, said Fresh Encounter is expected to contribute more than $350 million in retail sales and will strengthen SpartanNash’s wholesale business by gain volume from other distributors. The deal is expected to close this month.
The three fuel centers and stores are projected to add $20 million in net sales. This deal is on track to close by the end of the year.
“Looking forward, we continue to evaluate M&A opportunities based on our disciplined M&A framework,” Tony Sarsam, president and CEO of SpartanNash, said on the earnings call, according to a transcript provided by the website of Seeking Alpha investors. “We find that stability [of fuel centers] for buyers, refueling is actually something really attractive. So we think that’s a place where as we look for opportunities to change and expand our footprint, we’ll pay attention to those things.”
For the quarter ended Oct. 5, SpartanNash reported declines in both its retail and wholesale segments. Net sales decreased 0.6% year-over-year to $2.25 billion, driven by lower volume in the wholesale segment (down 1.6% to $1.58 billion), but partially offset by an increase of volume at the retail end (up 1.9% to $674.6 million). However, comparable store retail sales were down 0.7% year-over-year.
Gross profit was just over $354.6 million in the quarter, a slight increase from the year-ago period of just over $347.5 million.
Adjusted EBITDA came in at over $60.4 million, down from $60.9 million a year ago.
SpartanNash is holding firm on its 2024 forecast. The food solutions company’s net sales are expected to be between $9.5 billion and $9.7 billion, while adjusted EBITDA is forecast to be between $252 million and $257 million.
The company’s stock price fell more than 12% on Thursday after the earnings news.
On Monday, SpartanNash announced former Kroger and Target executive Juma Barry will serve as the company’s new senior vice president and chief retail officer. Barry replaces Executive Vice President of Corporate Retail Thomas Swanson, who will step down and serve as a consultant at the end of the year.
SpartanNash also announced in October that it has extended its Total Rewards benefits program to provide enhanced childcare options for its employees, elderly dependents and elderly family members.