GRAND RAPIDS, Mich.--(BUSINESS WIRE)--Feb. 4, 2002--Spartan Stores, Inc., (Nasdaq:SPTN) today reported financial results for its fiscal 2002 third quarter, which ended January 5, 2002.
Sales for the fiscal 2002 third quarter decreased 6.4 percent to $1.06 billion from $1.14 billion in last year's third quarter. Same-store sales for the retail grocery segment were 5.2 percent lower for the quarter. Operating margin declined to 0.7 percent from 1.8 percent in the prior-year period due principally to a decrease in the Company's Ohio market retail-store sales. Fiscal 2002's third-quarter pretax earnings from continuing operations included a $0.7 million provision for bad debt related to Kmart Corporation's filing of Chapter 11. Net earnings from continuing operations for the quarter were at break-even compared with net earnings of $7.0 million, or $0.36 per diluted share, last year.
"Clearly we are very disappointed with the third-quarter financial results," said Spartan's Chairman, President, and Chief Executive Officer, James B. Meyer. "The competitive environment in our Ohio market has been challenging, but we are firmly committed to improving our store performance and are treating it with utmost priority. We are resolute in our commitment to a value strategy and delivering top-quality products and services to our customers. Our desire is to create and maintain a pleasant shopping experience at all of our stores and we are improving the physical facilities where needed, to levels comparable with the best stores in our Ohio market."
Through the first 40 weeks of the fiscal year, sales increased 3.6 percent to $2.74 billion from $2.64 billion, and net income from continuing operations decreased to $15.1 million from $19.7 million last year. Gross margin increased to 17.2 percent from last year's
15.2 percent, and operating margin declined to 1.4 percent from 1.9 percent. Fiscal 2002's 40-week period includes net other gains of $2.3 million compared with last year's $2.4 million. This year's other gains include $1.5 million in net real estate gains and a $0.8 million gain from the sale of stock in a service provider. Last year's 40-week period included other gains of $3.5 million in net real estate gains and a $1.1 million loss on a software write off.
At January 5, 2002, shareholders' equity increased 8.0 percent to $235.9 million and the total long-term debt-to-capital ratio decreased to 59.3 percent from 61.2 percent at the end of fiscal 2001.
"As previously announced, we have taken immediate action to improve the performance of our Ohio stores. Those actions include implementation of an automated labor-scheduling program to ensure staffing levels that improve service, further improving our in-stock performance standards, and rapidly employing best-store merchandising and other practices from our top-performing stores. These steps will become more visible at the store level through better customer service, a mix of merchandise that better reflects local consumer preferences at an appealing value and improved product availability," Mr. Meyer said.
"These actions along with broader company initiatives focused on improving our distribution network efficiency, category management practices, and reducing corporate overhead costs are expected to improve our annualized net earnings between $5 and $10 million. We are in the beginning stages of many initiatives that will help drive and sustain future sales and earnings growth.
"We are also pleased to announce the election of Mr. Ken Stevens to our board of directors. Mr. Stevens was recently named Chief Operating Officer of Intimate Brands retail operation, The Bath and Body Works, and served as Chairman and Chief Executive Officer of Bank One Retail Group, President and Chief Operating Officer of the Taco Bell Division of PepsiCo, and a partner at McKinsey & Company. We are delighted to have Mr. Stevens join our board and believe that our Company will benefit greatly from his retail industry acumen and insight. His election provides additional strength to our board's retail expertise."
A telephone conference call to discuss the company's third-quarter financial results is scheduled for 9:00 a.m. eastern tomorrow, Tuesday, February 5, 2002. A live webcast of this conference call will be available on the company's website, www.spartanstores.com. Simply click on "Investor Information" and follow the links to the live webcast. The webcast will remain available for replay on the company's website for approximately ten days.
Spartan Stores, Inc., (Nasdaq:SPTN) Grand Rapids, Michigan, owns and operates 102 supermarkets and 25 deep-discount drug stores in Michigan and Ohio, including Ashcraft's Markets, Family Fare Supermarkets, Food Town, Glen's Markets, Great Day Food Centers, Prevo's Family Markets and The Pharm. The Company also distributes more than 40,000 private-label and national brand products to more than 350 independent grocery stores and serves as a wholesale distributor to 6,600 convenience stores.
This press release contains forward-looking statements that involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Internal and external factors that might cause such a difference include, but are not limited to, competitive pressures among food retail and distribution companies, changes in the interest rate environment and general economic and market conditions, difficulties assimilating and integrating acquisitions, difficulties in retail operations, labor shortages or stoppages, and other factors described in the Spartan Stores' Annual Report on Form 10-K and other filings with the SEC. Spartan Stores disclaims any intention or obligation to update or revise any forward-looking statements.
SPARTAN STORES, INC., AND SUBSIDIARIES
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
Third Quarter Year-to-Date
(16 weeks) ended (40 weeks) ended
(unaudited) (unaudited)
Jan. 5, Dec. 30, Jan. 5, Dec. 30,
2002 2000 2002 2000
----------- ----------- ----------- -----------
Net sales $ 1,062,758 $ 1,135,844 $ 2,736,390 $ 2,640,307
Cost of sales 885,892 947,304 2,265,021 2,238,066
----------- ----------- ----------- -----------
Gross profit 176,866 188,540 471,369 402,241
Operating expenses
Selling, general and
administrative 156,418 155,832 396,560 324,187
Depreciation and
amortization 13,506 12,389 35,229 27,694
----------- ----------- ----------- -----------
Total operating
expenses 169,924 168,221 431,789 351,881
Operating income 6,942 20,319 39,580 50,360
Non-operating
expense (income)
Interest expense 8,442 9,681 21,035 23,626
Interest income (722) (1,912) (1,874) (3,412)
Other (gains)
and losses (810) 854 (2,330) (2,361)
----------- ----------- ----------- -----------
Total non-operating
expense, net 6,910 8,623 16,831 17,853
----------- ----------- ----------- -----------
Earnings before income
taxes and discontinued
operations 32 11,696 22,749 32,507
Income taxes 12 4,667 7,650 12,789
----------- ----------- ----------- -----------
Earnings from
continuing operations 20 7,029 15,099 19,718
(Loss) earnings from
discontinued
insurance segment 34 274 (226) 325
----------- ----------- ----------- -----------
Net earnings $ 54 $ 7,303 $ 14,873 $ 20,043
=========== =========== =========== ===========
Basic earnings
per share:
Earnings from
continuing
operations $ 0.00 $ 0.36 $ 0.77 $ 1.18
(Loss) earnings
from discontinued
operations 0.00 0.01 (0.01) 0.02
----------- ----------- ----------- -----------
Net earnings 0.00 0.37 0.76 1.20
=========== =========== =========== ===========
Diluted earnings
per share:
Earnings from
continuing
operations $ 0.00 $ 0.36 $ 0.76 $ 1.18
(Loss) earnings
from discontinued
operations 0.00 0.01 (0.01) 0.02
----------- ----------- ----------- -----------
Net earnings $ 0.00 $ 0.37 $ 0.75 $ 1.20
=========== =========== =========== ===========
Weighted average
number of shares
outstanding:
Basic 19,758 19,498 19,483 16,677
Diluted 20,009 19,498 19,748 16,678
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
Jan. 5, March 31,
2002 2001
(Unaudited)
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 12,622 $ 21,577
Marketable securities 10,392 21,978
Accounts receivable, net 96,142 87,565
Inventories 208,655 179,589
Other current assets 10,907 12,970
----------- -----------
Total current assets 338,718 323,679
Other assets
Goodwill, net 156,756 155,737
Other 30,110 36,139
----------- -----------
Total other assets 186,866 191,876
Property and equipment, net 271,545 285,988
Total assets $ 797,129 $ 801,543
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 107,753 $ 116,105
Accrued payroll and benefits 29,347 37,158
Insurance reserves 16,833 20,602
Other accrued expenses 30,808 31,715
Current maturities of long-term debt 33,704 38,478
----------- -----------
Total current liabilities 218,445 244,058
Deferred taxes on income 10,545 13,840
Other long-term liabilities 21,815 18,600
Long-term debt 310,445 306,632
Shareholders' equity
Common stock, voting, no par value,
authorized 50,000 shares,
outstanding 19,763 shares and 19,262 115,700 109,868
Preferred stock, non-voting, no par value;
10,000 authorized;
no shares issued or outstanding 0 0
Accumulated other comprehensive income (3,239) 0
Retained earnings 123,418 108,545
----------- -----------
Total shareholders' equity 235,879 218,413
----------- -----------
Total liabilities and shareholders' equity $ 797,129 $ 801,543
=========== ===========
CONTACT: Spartan Stores, Inc.
Investor Contact: Dave Staples, 616/878-8319
Media Contact: Jeanne Norcross, 616/878-2830