Last week, SpartanNash announced preliminary net sales and earnings results for its first quarter 2019, noting “challenges in the supply chain, fresh kitchen, and retail operations.” The retailer and foodservice provider lowered its fiscal 2019 guidance significantly, though, despite challenges, SpartanNash's President and Chief Executive Officer David Staples noted “significant progress against [the company’s] strategic objectives.”
“We remain focused on achieving our top five objectives for 2019: 1) growing sales in the mid-single digit range; 2) realizing an annual run rate of at least $15 million of earnings improvements through Project One Team over 24 months; 3) strengthening our management team, systems, food processing, and supply chain operations; 4) reducing debt and working capital while lowering financial leverage ratios; and 5) improving adjusted operating earnings and EBITDA,” said Staples.
In a press release, SpartanNash noted that the company had lowered its adjusted EPS from continuing operations from $0.33-$0.37 to $0.23-$0.24 for the quarter ending April 20, 2019. For the fiscal year ending December 28, 2019, the company lowered its adjusted EBITDA from $210-$220 million to $190-$205 million and its adjusted EPS from continuing operations from $1.70-$1.80 to $1.20-$1.50.
Despite significant reductions in its predictions, SpartanNash maintained its prediction that net sales growth would continue in the mid-single digits.
“While we made significant progress against our strategic objectives, challenges in the supply chain, fresh kitchen, and retail operations did not allow us to convert our top line success to the bottom line. This, along with the ongoing voluntary recall at our fresh cut fruit operations caused us to fall short of our original financial expectations in the first quarter and will impact our fiscal year 2019 outlook,” Staples said. “We continue to be pleased with our sales growth and ability to attract new business at our fresh kitchen operations. Our team remains focused on deploying strategies to generate profitability from this growth, despite the historically tight labor markets and higher cost of transportation.”
Staples affirmed the continuing success of its Project One Team in generating cost savings.
“Our team remains committed to improving our operational execution and financial results as we begin the implementation of initiatives in connection with our company-wide program, Project One Team, and we continue to build out our supply chain leadership,” added Staples. “Project One Team has exceeded our initial expectations and we now estimate the initiative will result in more than $20 million in annual run rate efficiencies and cost reductions when fully implemented over the next 24 months. Additionally, we have made key leadership changes across our organization and engaged a team of outside production experts for our fresh kitchen to improve our execution and best position us for sustainable improvements in our business for the remainder of 2019 and into the future. As we look to the remainder of the fiscal year, we believe our comparisons to the prior year will improve sequentially each quarter.”
To read SpartanNash’s statement in its entirety, click here.