Spartan profits jump despite lagging sales
Michigan’s brain drain was one of the factors that pushed down third-quarter consolidated net sales for Spartan Stores Inc. by 4.4 percent, to $782.3 million from $786.9 million in 2010’s third quarter, President and CEO Dennis Eidson said.
“The population in Michigan shrank a bit. There are less people here to consume products and we’re all fighting for our fair share of the pie. How do you sell products to people who aren’t here?” Eidson told analysts on Thursday.
Still, third quarter earnings moved up by 42 percent to $7.5 million, from $5.3 million in the third quarter of 2010. Earnings per share came in at 32 cents, above last year’s third quarter mark of 22 cents.
Quarter over quarter, comparable store sales have improved for three quarters, and fuel and distribution sales have remained strong, Eidson said.
Supermarket sales, excluding fuel, declined by 4.4 percent to $435.4 million in the third quarter compared to 2010.
But Spartan Stores’ distribution side grew net sales from $343.6 million in 2010’s third quarter to $346. 9 million in 2011’s third quarter on improved pharmacy sales, operating efficiencies and inventory reduction.
Eidson said the company has rolled out a loyalty card marketing program, which it began last year in Glen’s Markets in northern Michigan, to its VG’s Food and Pharmacy customers in southeastern Michigan.
He said he expects Spartan to bring the program to D&W Fresh Markets and Family Fare stores in West Michigan, but was reluctant to say when.
“The marketplace in West Michigan will likely see the card,” Eidson said. He said the points-based program was adjusted after it was launched and Glen’s, which proved advantageous and was the model used for VG’s customers.
He added that while the Michigan economy and unemployment are stabilizing, the holidays were disappointing. D&W remains the company’s strongest flag.
“We didn’t have the kind of Christmas I had hoped we would have,” Eidson said. “It wasn’t awful but it was a little tougher.”
Spartan Stores Inc., based in Byron Center, has 370 distribution customers