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Spartan Considers Purchases
GRAND RAPIDS — As Spartan Stores Inc. moves into the second phase of its expansion plan, the Byron Center-based grocer and distributor is open to acquisitions on both the distribution and retail sides in contiguous areas, company executives told shareholders at the company’s annual meeting in Grand Rapids today.
“We’re also seeking potential acquisition of distribution facilities in contiguous marketplaces,” said Dennis Eidson, executive vice president and COO.
“As the wholesaler consolidation continues to play itself out, there’s probably going to be some fallout of distribution facilities in the Midwest. The Farmer Jack’s closure has created tremendous opportunities for our independent customers. When all the dust settles on the East Side of the state, we see Spartan as a very, very large winner of that implosion there of Farmer Jack’s. We are going to continue to aggressively pursue distribution customers.”
As it tackles warehouse improvements to boost productivity, Eidson said the company, the nation’s 10th largest grocery distributor, is contemplating the addition of ice cream distribution to its services.
Spartan also is looking forward to the impact of its $100 million distribution deal with Martin’s Super Markets in Indiana, which Chairman, CEO and President Craig C. Sturken said will begin to show up in second quarter 2008 financial reports.
Spartan’s distribution arm holds 50 percent of the market share in Michigan, Indiana and Ohio, Eidson reported, and 70 percent in Michigan alone.
On the retail side, Eidson said Spartan intends to continue to position itself as the neighborhood alternative to supercenters. He noted that Spartan is the lone supermarket chain in its markets.
“We’re committed to that neighborhood store concept,” Eidson said. “It is an alternative to Meijer. It is an alternative to Super Wal-Mart.”
He said Spartan intends to build the first new D&W Fresh Market that wasn’t included in its acquisition of the chain. Expect other stores to be rebuilt or remodeled, he added, pointing to remodels at Breton Village and Cascade, and a new store under construction in Allendale.
“We don’t want to rest on our laurels,” he said.
Eidson said Spartan will continue to refine the Fresh Market concept, and consumers will see a higher profile for pharmacy and other health-related services.
“Right now, the company is focused in western Michigan, but we believe it has legs to grow in other places,” Eidson said. Further retail acquisitions “may be with existing customers, others may be retailers we don’t supply, in adjacent marketplaces,” he added.
In terms of shareholder value, Sturken said that $100 invested in Spartan in 2002 would have grown to $358, while the Russell 2000 and NASDAQ indices show less than half that amount of growth.
“We think we’ve been an investment of choice,” Sturken said.
The stock was trading at $26.07 at noon today.