Spartan Stores, Inc. (Nasdaq:SPTN), a leading regional grocery distributor and retailer, today reported financial results for its 16-week third quarter ended December 31, 2011.
Third Quarter Results
Consolidated net sales for the 16-week third quarter increased 1.9 percent to $797.2 million compared to $782.3 million in the same period last year. Both the distribution and retail segments reported increased sales during the quarter.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) for the quarter increased 1.1 percent to $26.0 million, or 3.3 percent of net sales, compared to $25.7 million, or 3.3 percent of net sales last year.“We are pleased with our ability to generate third quarter earnings in line with our expectations and to consistently increase sales in our Distribution segment for the fifth consecutive quarter, despite a more challenging sales environment than anticipated,” stated Dennis Eidson, Spartan’s President and Chief Executive Officer. “Our Retail team continues to find ways to provide the consumer with value and a quality shopping experience. Our most recent effort, the Yes loyalty program, provides many benefits including free groceries and the best prescription drug program in our markets. In addition, our expanded Speedway fuel rewards partnership allows us to offer fuel rewards to the majority of our consumers in Michigan and provides existing distribution customers an opportunity to offer similar services. We remain confident that our consumer centric focus will continue to resonate well with both existing distribution customers and the end consumer as we position Spartan Stores for increased long-term growth.” Third quarter gross profit margin decreased 70 basis points to 20.4 percent from 21.1 percent in the same period last year. The decline was primarily due to a higher mix of fuel sales, an increased LIFO expense of approximately $1.8 million, and a slightly lower fuel gross margin rate this year versus last year. The increased LIFO expense was due to higher inflation in this year’s third quarter and the cycling of a $0.7 million LIFO inventory credit provision from lower inventory levels generated in last year’s third quarter as a result of warehouse operational improvements.