On May 30, 2024, SpartanNash Co (SPTN, Financial) released its 8-K filing for the first quarter of fiscal 2024, ending April 20, 2024. The food solutions company, which operates in both the Retail and Wholesale segments, reported a 3.5% decrease in net sales to $2.81 billion, falling short of the estimated $2.85 billion. Despite the revenue decline, the company posted net earnings of $0.37 per diluted share, surpassing the analyst estimate of $0.50 per share.
Company Overview
SpartanNash Co is a food solutions company that delivers the ingredients for a better life. Its principal business activities include distributing grocery products to a diverse group of 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 private label brand. SpartanNash operates in two segments: Retail and Wholesale, with the majority of revenue earned from its Wholesale segment.
Performance and Challenges
SpartanNash Co's net sales decreased by 3.5% to $2.81 billion, driven by lower volumes in both the Wholesale and Retail segments. The Wholesale segment saw a 3.4% decline in net sales to $2.01 billion, primarily due to reduced revenue in the national accounts customer channel. The Retail segment experienced a 3.6% decrease in net sales to $792.2 million, with comparable store sales down 2.5%. This decline was attributed to a reduction in food assistance program benefits and lower fuel sales.
Financial Achievements
Despite the revenue decline, SpartanNash Co reported net earnings of $0.37 per diluted share, up from $0.32 per diluted share in the same period last year. The increase in net earnings was primarily due to a higher gross profit rate, which included lower LIFO expense of $9.2 million and benefits from the merchandising transformation, as well as decreased incentive compensation. Adjusted EPS was $0.53, compared to $0.64 in the previous year. Adjusted EBITDA was $74.9 million, compared to $76.8 million.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $2.81 billion | $2.91 billion |
| Net Earnings per Diluted Share | $0.37 | $0.32 |
| Adjusted EPS | $0.53 | $0.64 |
| Adjusted EBITDA | $74.9 million | $76.8 million |
Income Statement Highlights
SpartanNash Co reported a gross profit of $440.3 million, down from $446.7 million in the same period last year. Operating expenses decreased to $409.7 million from $422.4 million. Operating earnings increased to $30.6 million from $24.3 million. Interest expense rose to $13.5 million from $11.6 million, while income tax expense increased to $5.2 million from $2.4 million. Net earnings for the quarter were $13.0 million, up from $11.3 million in the previous year.
Balance Sheet and Cash Flow
As of April 20, 2024, SpartanNash Co reported total assets of $2.34 billion, slightly down from $2.36 billion at the end of fiscal 2023. Total liabilities were $1.56 billion, compared to $1.58 billion at the end of fiscal 2023. Shareholders' equity stood at $785.2 million, up from $778.2 million. The company generated $36.5 million in cash from operating activities, compared to a cash outflow of $2.7 million in the same period last year.
Outlook and Strategic Initiatives
SpartanNash Co reaffirmed its previous profitability guidance for fiscal 2024, with adjusted EBITDA expected to be between $255 million and $270 million, and adjusted EPS between $1.85 and $2.10. The company updated its total net sales guidance to reflect current trends and market conditions, with a revised range of $9.5 billion to $9.7 billion. The company continues to focus on its transformational programs, which are on track to deliver $50 million to $60 million of annual run rate savings from supply chain transformation, merchandising transformation, and go-to-market strategy.
SpartanNash continues to prove that we can deliver despite the challenging market dynamics, and we remain on target to reach the $125 to $150 million of gross benefits set out in our strategic plan by the end of 2024 – a year earlier than initially communicated," said SpartanNash CEO Tony Sarsam.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from SpartanNash Co for further details.
