SpartanNash Slips To Loss In Q3 On Charges, But Revenues Beat View

(RTTNews) - Food distributor SpartanNash Co. (SPTN) on Wednesday reported a loss for the third quarter as higher revenues were more than offset by merger and restructuring charges. Excluding items, the company reported a profit for the quarter, while revenues beat analysts' expectations.

Spartan Stores and Nash Finch Co. completed their merger in November 2013. Spartan Stores and Nash Finch, in July 2013, announced a definitive merger agreement for the companies to combine in an all-stock merger valued at about $1.3 billion, including existing net debt at each company.

SpartanNash's net loss for the third quarter was $13.99 million or $0.50 per share, compared to net income of $3.40 million or $0.16 per share in the same period last year.

The latest quarter's results include net after-tax charges of $24.8 million, or $0.89 per share, related to merger expenses, asset impairment and restructuring charges for underperforming and closed stores and land held for future development, debt extinguishment charges due to merger-related financing, other one-time and non-cash expenses.

Excluding items, adjusted earnings from continuing operations for the quarter were $11.14 million or $0.40 per share, compared to $4.86 million or $0.22 per share in the prior-year period. On average, five analysts polled by Thomson Reuters expected the company to earn $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter surged 69 percent to $1.34 billion from $789.88 million in the prior-year period. Analysts had a consensus revenue estimate of $805.80 million.

The increase in sales were primarily due to $563.2 million in sales generated as a result of the merger, comparable store sales increase of 0.7 percent, and the impact of new distribution customers. These were partially offset by $46.1 million in sales for the extra week in last year's quarter.

Dennis Eidson, SpartanNash's President and Chief Executive Officer said, "While the merger with Nash Finch contributed a significant portion of our growth in the quarter, we produced strong results in our legacy business, which is a testament to the excellence of our management team and associates. We are excited to begin the next phase of SpartanNash's development and our integration activities are underway and progressing as planned."

Net sales for the distribution segment grew 64 percent from the year-ago period to $565.80 million, while net sales for the retail segment increased 17 percent to $520.91 million. Net sales for the company's military segment were $248.64 million.

Gross profit margin declined to 16.9 percent from 20.4 percent in the prior-year period, primarily reflecting the change in mix of sales due to the merger and the impact of low inflation.

Looking ahead to the first quarter, SpartanNash forecasts adjusted earnings from continuing operations in a range of $0.33 to $0.38 per share on net sales between $2.30 billion to $2.34 billion. Analysts currently expect earnings of $0.46 per share for the quarter on revenues of $605.29 million.

The company anticipates comparable store sales in its legacy retail segment will be positive for the third consecutive quarter.

For fiscal year 2014, SpartanNash forecasts adjusted earnings from continuing operations in a range of $1.65 to $1.75 per share on revenues between $7.90 billion and $8.04 billion. Analysts currently expect the company to report full-year earnings of $1.54 per share on revenues of $2.68 billion.

SpartanNash expects that reported retail comparable store sales will be positive for the year. However, total sales will be negatively impacted by about $50 million resulting from the store closures occurring in the third quarter of the Transition Period.

SPTN closed Wednesday's trading at $23.28, up $0.03 or 0.13 percent on a volume of 103,989 shares. In after-ours, the stock further gained $0.72 or 3.09 percent to $24.00.