Minneapolis-based food retailer and distributor Nash Finch Company yesterday [Wednesday] reported increased earnings of US$6.7m, or 55 cents per diluted share in the Q4 ended 29 December 2001, compared to US$5.2m, or 45 cents per diluted share, year on year.
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Total revenues for the 2001 Q4 increased to US$978.1m, versus year-ago revenues of US$968.1m. EBITDA grew to US$30m in the 2001 Q4 compared to US$29.2m in the prior-year, representing 3.1% and 3% of sales, respectively.
Total 2001 revenues were US$4.107bn versus US$3.956bn in 2000. Earnings for the FY increased to a record US$21.3m, or US$1.78 per diluted share, compared to US$15.8m, or US$1.38 cents, in 2000. Full-year 2001 EBITDA rose 14% to a record US$120.2m, or 2.9% of sales, compared to EBITDA of US$105.9m, or 2.7% of sales, in 2000. Including the debt issuance cost write-off in 2000, net earnings were US$15.5m, or US$1.35 per diluted share.
Ron Marshall, president and CEO, commented: “I am pleased to report our ninth consecutive quarter of year over year growth in comparable earnings, and record levels of both net profit and EBITDA.
“We remain performance-driven and focused on continued execution of our strategic plan. These efforts, coupled with the dedication and commitment of all Nash Finch associates nationwide, fuel our continuing momentum.
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By GlobalData“We remain confident in a very bright future, despite the intensely competitive market.
“We continue to expect earnings per share for fiscal 2002, as previously announced, to be in the range of US$2.00 to US$2.05 per diluted share, reflecting an increase of 12% to 15% over the prior-year. Excluding the effect of goodwill amortization of 39 cents per share, 2002 earnings are expected to range between US$2.39 and US$2.44 per diluted share. For the Q1, we expect diluted earnings per share to be in the range of 40 to 42 cents. This compares to Q1 2001 diluted earnings per share of 37 cents, calculated on a comparable basis.”
Food distribution segment results
Q4 revenues for the food distribution segment totalled US$488m versus US$493.5m year on year. Food distribution profits grew to US$16.6m versus US$14.3m. For the FY 2001, food distribution revenues rose to US$2.077bn compared to US$1.958bn year on year period. Profits improved 27% to a record US$60.7m versus US$47.8m in fiscal 2000 as the company continues its focus on expense reduction and efficiency.
Marshall continued: “Our industry-leading performance in food distribution continues to drive additional business gains through new account capture, one of our strategic objectives.
“Throughout the year we gained an additional US$231m in new business, including many market-leading retailers captured from large, national competitors. Independent customers continue to select Nash Finch as their food distribution partner as a direct result of our strong customer service orientation and our high performance in selector accuracy, on-time delivery and fill rate.”
Military segment revenues in the Q4 were US$236.4m compared to US$237.9m a year ago. Profits increased to US$5.3m versus US$5.1m in the same period last year. For the year, revenues totaled a record US$995.7m compared to US$968.9m in fiscal 2000. The segment posted 2000 record profits of US$23.1m, up from US$21.6m in the prior-year period.
Retail segment results
In the Q4, revenues from retail stores rose 7% to US$253.6m versus US$236.7m in 2000, while profits increased to US$10.4m, up from US$10.1m year on year. For FY 2001, retail revenues were a record US$1.035bn compared to US$1.029bn in 2000 reflecting the acquisition of the 14-store U Save Foods, Inc., offset by the divestiture of the company’s non-strategic stores in North and South Carolina. Profits improved 17% to a record US$38.8m, up from US$33.3m in the prior-year period. Same-store sales declined 1% year-over-year, reflecting intense competitive activity.
“In 2001, we further advanced on our strategic goal of becoming a leading retail chain in the Upper Midwest,” stated Marshall. “Our acquisitions and new store openings throughout the year affirms our progress.”
Key retail events in 2001
In August 2001, the acquisition of U Save Foods, Inc., was completed. All stores were converted to primary company banners, strengthening brand recognition, boosting marketing efficiencies and creating the largest supermarket chain in Nebraska.
Two new Econofoods® stores opened in Hudson, Wis., and Red Wing, Minn. In addition, a store was also acquired in Sioux Falls, S.D. and is operating under the Econofoods banner.
Buy n Save®, an extreme value retailing concept, is now in an expansion mode. The fifth store opened in Muscatine, Iowa in January, followed by a sixth unit in McCook, Neb. in February. The seventh unit is scheduled to open in March in West St. Paul, Minn.
The new Hispanic format, now named Avanza(TM), was announced and development began. These stores provide a new, progressive shopping experience for the Hispanic supermarket customer with a culturally appropriate mix of merchandise, services and store environment. Our first Hispanic units open in Denver, Colo. during the Spring of 2002.
“Every aspect of our new Hispanic format is the product of ongoing research, extensive focus group study and constant evaluation,” Marshall offered. “The name Avanza provides prospective customers with a short, easy-to-pronounce and memorable store name. Avanza simply means, ‘advance’ and that is just what we intend this effort to do.”
Leveraging Scale
“Leveraging our scale to improve performance for independent and corporate stores through superior execution and clear differentiation is one of our strategic goals,” continued Marshall. “Increased scale provided innovation and cost benefits to our customers in 2001.”
Significant accomplishments in 2001
The Signature Program of high-quality products available only at Nash Finch owned and supplied stores broadened through the addition of new products, such as Our Signature(TM) Angus Premium Beef, as well as line extensions including Cinnfully Good flavored coffee beans and syrups.
The Signature Partner Program grew through the addition of new vendors. This partnership links proprietary signature items with national brand products, such as those offered by General Mills/Pillsbury and Conagra, to build additional brand awareness and link the perishable and non-perishable departments.
Nash Finch won the Private Label Manufacturers Association’s “Salute to Excellence” Award, the industry’s highest award for store brands. Further testimony to the success of store brands at Nash Finch is the 16% growth year-over-year for store brands, including Our Family®, IGA and Fame® labels.
NashNet(TM), an Internet retail solution, became available to independent stores supplied by Nash Finch. Initial features included introduction of new merchandising items, promotional offerings, on-line catalogs, plan-o-grams, reports, invoices and e-news.
Outlook
“In 2002, we remain firmly committed to our strategic plan and will aggressively capitalize on our positive momentum. Through consistent execution and outstanding customer service we continue to capture new accounts and grow our food distribution business. As a result of our strong performance we remain a leader in the military distribution business.
“In retail, our strategy is to be a leading retail chain in the Upper Midwest, not only through conventional grocery retailing but also through expansion of our Avanza and Buy n Save stores. Finally, through superior execution and clear differentiation, we continue to leverage our scale to benefit both our independent customers and corporate retail stores. In summary, increasing shareholder value, by raising the bar on performance, remains the focus at Nash Finch Company,” concluded Marshall.
