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SpartanNash(SPTN) - 2025 Q1 - Earnings Call Transcript
SPTNSpartanNash(SPTN)2025-05-29 13:30

Financial Data and Key Metrics Changes - The company reported a record adjusted EBITDA of nearly 77millionforQ12025,a2.677 million for Q1 2025, a 2.6% increase compared to Q1 2024's adjusted EBITDA of 74.9 million [6][21] - Consolidated net sales increased by 3.7% to over 2.9billioncomparedto2.9 billion compared to 2.8 billion in Q1 2024 [7][20] - Gross profit for the quarter rose to 481million,representing16.5481 million, representing 16.5% of net sales, up from 15.7% in the prior year [20] Business Line Data and Key Metrics Changes - Retail segment sales grew by 19.6% to 947.2 million, driven by recent acquisitions and a 1.6% increase in comparable store sales [23] - Wholesale segment net sales were nearly 2billion,withmilitarychannelsalesgrowingfor13consecutivequarters,althoughtherewassoftnessinnationalaccounts[9][22]−RetailadjustedEBITDAdecreasedto2 billion, with military channel sales growing for 13 consecutive quarters, although there was softness in national accounts [9][22] - Retail adjusted EBITDA decreased to 15.1 million from 17.3millionintheprioryearduetohigherlaborandoccupancycosts[23]MarketDataandKeyMetricsChanges−Thecompanyexperiencedan80basispointheadwindincomparablestoresalesduetotemporarystoreclosuresfromanicestorm[8][50]−Foodathomeinflationexpectationswererevisedto217.3 million in the prior year due to higher labor and occupancy costs [23] Market Data and Key Metrics Changes - The company experienced an 80 basis point headwind in comparable store sales due to temporary store closures from an ice storm [8][50] - Food at home inflation expectations were revised to 2% for the fiscal year, up from a previous expectation of 1% [28][72] Company Strategy and Development Direction - The company is focusing on a cost leadership program expected to deliver 50 million in annual benefits, with 20millionanticipatedinthecurrentyear[11][19]−Thestrategicplanaimstounlockthepotentialoftheretailbusiness,withinitiativesimprovingexecutionandenhancingtheshopperexperience[12][30]−Expansionplansincludeincreasingcapitaldeploymentintostoreremodels,conveniencestoresectorgrowth,andexpandingtheHispanicfoodmarketfootprint[14][15]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinachieving2025targetsdespitechallengingmarketconditions,reaffirmingyearlyguidance[16][25]−Thecompanynotedthatinflationarypressuresarestable,withaslightupwardtrendinfoodprices[72]−Managementhighlightedtheimportanceofadaptingtoconsumertrends,includingafocusonhealthandvalue[80][82]OtherImportantInformation−Thecompanygenerated20 million anticipated in the current year [11][19] - The strategic plan aims to unlock the potential of the retail business, with initiatives improving execution and enhancing the shopper experience [12][30] - Expansion plans include increasing capital deployment into store remodels, convenience store sector growth, and expanding the Hispanic food market footprint [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 targets despite challenging market conditions, reaffirming yearly guidance [16][25] - The company noted that inflationary pressures are stable, with a slight upward trend in food prices [72] - Management highlighted the importance of adapting to consumer trends, including a focus on health and value [80][82] Other Important Information - The company generated 25.8 million in cash from operating activities during the quarter, down from 36.5millioninQ12024[24]−Liquidityattheendofthequarterwasapproximately36.5 million in Q1 2024 [24] - Liquidity at the end of the quarter was approximately 270 million, providing capacity for strategic growth plans [25] Q&A Session Summary Question: Expansion of Hispanic store format - The company currently has four Super Mercado stores in Omaha and plans to open two to three more in the Midwest this year [33][34] Question: Performance of newly acquired stores - Newly acquired Hispanic stores have shown strong performance, leading in both top and bottom line metrics [38] Question: Cost leadership program details - The cost leadership program is expected to deliver 20millioninbenefitsthisyear,withmostimpactsseeninthesecondhalf[45][46]Question:RetailprofitabilitypressuresinQ1−Theicestormandpharmacy−relatedpressuressignificantlyimpactedprofitability,withlossesestimatedbetween20 million in benefits this year, with most impacts seen in the second half [45][46] Question: Retail profitability pressures in Q1 - The ice storm and pharmacy-related pressures significantly impacted profitability, with losses estimated between 1 million to $2 million due to spoilage [52][54] Question: Competitive environment differences - The company noted similar promotional activities in both wholesale and retail segments, with a strong military business performance [58][61] Question: Food at home inflation expectations - The increase to a 2% inflation expectation reflects a gradual upward trend in the marketplace [72][73] Question: Impact of food stamp changes - The impact from changes in food stamps was slightly negative in Q1, but not significantly amplified due to a low proportion of shoppers using SNAP [85] Question: M&A activity outlook - The company remains open to acquisition opportunities, actively seeking both smaller tuck-in acquisitions and larger opportunities [87]