SpartanNash (SPTN) Q3 Earnings Miss Estimates, Decline Y/Y
SpartanNash Co. SPTN delivered third-quarter 2023 results, with the top and bottom lines declining year over year. Also, both metrics missed the Zacks Consensus Estimate. Management narrowed its 2023 guidance on the dismal third-quarter results.
However, SpartanNash is making significant strides in advancing its strategy, expanding market share and implementing transformative initiatives despite the challenges prevalent in the industry. The company is achieving cost savings, engaging in productive partnerships with suppliers, and providing dependable services to Wholesale customers and Retail shoppers.
SpartanNash Company Price, Consensus and EPS Surprise
SpartanNash Company price-consensus-eps-surprise-chart | SpartanNash Company Quote
Q3 in Detail
The Zacks Rank #4 (Sell) company posted adjusted earnings from continuing operations of 54 cents per share in the third quarter of fiscal 2023, down from adjusted earnings of 55 cents in the year-ago quarter. The metric missed the Zacks Consensus Estimate of 60 cents.
Consolidated net sales were $2,264.2 million, down 1.4% year over year. Also, the top line missed the Zacks Consensus Estimate of $2,309 million. The decline in the year-over-year performance was driven by reduced sales in the Wholesale and Retail segments. This downturn resulted from a decrease in volume, partially mitigated by increased pricing due to inflationary trends.
Gross profit fell 1.5% year over year to $347.5 million. The decrease resulted from reduced unit volumes in both segments. We note that the gross margin expanded 10 basis points (bps) to 15.4% from the prior-year period.
Selling, general and administrative expenses declined 3.2% to $322.8 million. As a percentage of net revenues, selling, general and administrative expenses contracted 20 bps to 14.3% in the third quarter of 2023.
Throughout the quarter, the company's supply-chain transformation yielded efficiencies that helped counteract challenges faced by the industry as a whole. The decrease in expenses was additionally attributed to lower incentive compensation than the year-ago quarter.
Adjusted EBITDA came in at $60.9 million compared with $57.3 million in the year-ago period. We note that the adjusted EBITDA margin expanded 20 bps to 2.7% in the third quarter.
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Segmental Details
Net sales at the wholesale segment declined 1.7% to $1,602 million. This was primarily attributed to shifts in marketplace demand from a specific national account customer.
Retail’s net sales decreased 0.7% to $662.2 million in the reported quarter. However, comparable store sales in the retail sector increased 1.2%, primarily driven by the inflationary impact on pricing. Furthermore, a decline in fuel sales contributed to a 0.8% reduction in reported net sales.
Other Financials
SpartanNash ended the quarter with cash and cash equivalents of $17.6 million, long-term debt and finance lease liabilities of $535.8 million, and a total shareholders’ equity of $777.3 million.
Cash generated from operating activities was $95.7 million during the 40 weeks ended Oct 7, 2023. Moreover, capital expenditure and IT capital totaled $90.3 million in the same period. For 2023, management projects capital expenditure and IT capital of $130-$140 million.
Additionally, the company engaged in the repurchase of 765,194 shares in the year-to-date period, totaling $18.5 million, with an average price of $24.21 per share. As of Oct 7, 2023, there was $25.5 million available under the share repurchase program set to expire on Feb 22, 2027.
2023 Outlook
Backed by the year-to-date performance, management narrowed its 2023 guidance. Management projects net sales of $9,650-$9,850 million versus the earlier mentioned $9,650-$9,950 million. Notably, it delivered net sales of $9643 million last year.
SpartanNash revised its outlook for adjusted EBITDA, anticipating $253-$258 million. This compared with the previous guidance of $248-$263 million. Notably, it reported $243 million in the previous year.
Adjusted EPS is projected at $2.20-$2.28 compared to the earlier mentioned $2.20-$2.35. Notably, it reported $2.33 last year.
This grocery retailer’s stock movement shows that its shares have lost 6.4% in the past three months against the industry’s 1.5% rise.
3 Promising Stocks
A few better-ranked stocks in the same sector are Costco Wholesale Corporation COST, Ross Stores Inc. ROST and Walmart Inc. WMT.
Costco Wholesale sells high volumes of foods and general merchandise. It has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Costco Wholesale’s current fiscal-year earnings and sales indicates growth of 6.9% and 4.3% from the year-ago period’s reported figures. COST has a trailing four-quarter average earnings surprise of 2.1%.
Ross Stores is an off-price retailer of apparel and home accessories. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Ross Stores’ current fiscal-year sales and EPS suggests growth of 7.1% and 19.4%, respectively, from the year-ago reported figures. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart operates a chain of hypermarkets, discount department stores and grocery stores. It has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings suggests growth of 5% and 2.5%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Walmart Inc. (WMT) : Free Stock Analysis Report
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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
SpartanNash Company (SPTN) : Free Stock Analysis Report
