Spartan's Earnings Increase 36 Percent
GRAND RAPIDS — Fiscal 2007 proved to be another successful year for Spartan Stores, marking its fourth consecutive year of significant financial and operational progress.
Net earnings for the quarter were up 36.4 percent to $7.5 million, or 35 cents per diluted share, versus $5.7 million, or 27 cents per diluted share, in last year’s fourth quarter. Consolidated net sales for the 13-week fourth quarter and fiscal 2007 year that ended March 31 increased 23.6 percent to $559.5 million, up from $452.8 million in last year’s 12-week fourth quarter. The extra week in 2007’s fourth quarter added $42.3 million to consolidated net sales.
Operating earnings improved for the fifth consecutive quarter, increasing 34.2 percent to $14 million from $10.4 million in the same period last year. Fourth-quarter net income was $7.2 million, and for fiscal 2007, it was $25.2 million.
“Including the additional week of sales this year, these are the highest levels of fourth-quarter and annual net income we have achieved since becoming a public company,” said chairman, president and CEO Craig C. Sturken. “In addition, we surpassed $80 million in annual earnings before interest, taxes, depreciation and amortization threshold this year, a milestone for our company.”
Sturken noted that at the end of fiscal 2006, Spartan Stores set out to further develop its distribution business by adding new accounts and increasing its sales penetration with existing customers to Spartan’s private label products and perishable product offerings. Also, the company improved its retail sales growth by launching four additional fuel centers; adding 13 stores to its distribution customer network; improving the performance of certain existing stores; and integrating the operations of D&W Food Centers. Sturken said the D&W stores are performing better with each quarter, as Spartan fine-tunes its marketing, merchandising and other consumer offerings.
In fiscal 2007, Spartan Stores also acquired the operations of Prairie Stone Pharmacy, began construction on a new 48,500-square-foot prototype store, and announced the acquisition of 20 retail stores from G&R Felpausch. The company also recently announced an expanded supply relationship with Martin’s Super Markets in Indiana, a relationship Sturken said has important strategic implications for Spartan’s growth opportunities outside of Michigan. Martin’s Super Markets are expected to provide more than $100 million in incremental sales volume.
For Spartan’s distribution segment, fourth-quarter net sales increased 12.8 percent to $293.8 million, up from $260.5 million in the year-ago period. Spartan attributed most of the sales increase to new business and higher sales to existing customers. In its retail segment, fourth-quarter retail net sales increased 38.2 percent to $265.7 million, up from $192.3 million in the fourth quarter of 2006. The increase was due primarily to incremental sales from the acquired retail stores and pharmacies, comparable store sales growth, and the extra week of sales, which totaled $119.4 million.