SpartanNash Q2 Profit More Than Doubles, Lifts Low End Of 2014 Earnings Outlook

(RTTNews) - Food distributor SpartanNash Co. (SPTN) on Wednesday reported a profit for the second quarter that more than doubled from last year on higher sales and fewer charges, as results continued to benefit from the company's merger with Nash Finch.

Looking ahead, SpartanNash forecast third-quarter earnings to be at par or slightly below last year's level and raised the lower end of its fiscal 2014 earnings outlook. The company affirmed its sales forecast for the full-year.

Dennis Eidson, President and Chief Executive Officer of SpartanNash said, "The earnings upside was driven primarily by continued favorable synergy realization and our retail segment. While the quarter started off slowly due to the later timing of Easter, sales trends improved as the quarter progressed and the retail division achieved positive comparable store sales over the back half of the second quarter despite some softening in the consumer environment."

Grand Rapids, Michigan-based SpartanNash's net income for the second quarter was $17.32 million or $0.46 per share, up from $7.99 million or $0.36 per share in the year-ago period.

The latest quarter's results include net after-tax charges of $2.3 million or $0.06 per share, related to merger integration expenses as well as asset impairment and restructuring costs. It also includes a tax benefit of $0.6 million, or $0.02 per share, related to the favorable settlement of an unrecognized tax liability established in the prior year.

The prior-year quarter's results include net after-tax charges of $2.1 million or $0.09 per share, related to merger expenses and asset impairment charges.

Excluding items, adjusted earnings from continuing operations for the quarter were $19.06 million or $0.50 per share, compared with $10.15 million or $0.46 per share in the prior-year quarter. On average, four analysts polled by Thomson Reuters expected earnings of $0.43 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated net sales for the quarter more than doubled to $1.81 billion from $651.13 million in the prior-year period. Analysts expected revenues of $1.83 billion for the quarter.

The increase in sales was primarily due to $1.2 billion in sales generated as a result of the November 2013 merger with Nash Finch Co.

Gross margin for the quarter contracted to 14.7 percent from 20.5 percent in the prior-year period, due to the change in segment mix of the company's operations due to the merger and the impact of continued low inflation.

Looking ahead to the third quarter, SpartanNash forecasts net earnings from continuing operations will be at or slightly below last year's $0.43 per share, excluding merger integration costs and any other one-time expenses. Analysts currently expect the company to report earnings of $0.53 per share for the quarter.

For fiscal 2014, SpartanNash narrowed its outlook for earnings to a range of $1.70 to 1.75 per share, from the prior range of $1.65 to $1.75 per share. The company affirmed its outlook for full-year sales of $7.90 billion to $8.04 billion.

Analysts currently expect earnings of $1.75 per share for the year on revenues of $7.89 billion.

Eidson added, "As we look to the second half of the year, we remain optimistic that we are in a position to deliver our sales and earnings outlook for fiscal 2014, despite the lack of non-perishable inflation, negative impact of the reduction in SNAP benefits and competitive openings."

SPTN closed Wednesday's trading at $21.73, up $0.06 or 0.28 percent on a volume of 125,451 shares.