SpartanNash's (SPTN) Earnings Beat in Q2, Sales Rise Y/Y
SpartanNash Company SPTN posted mixed results in the second quarter of 2023 wherein the top line missed the Zacks Consensus Estimate while the bottom line beat. While sales increased year over year, earnings decreased from the year-ago period.
The company is on track with its long-term plan transformation work. It has been implementing several ways of working across its go-to-market functions, which will launch in the next quarter. It anticipates run-rate cost savings of roughly $20 million by the end of the year.
This grocery retailer’s stock movement shows that its shares have lost 2.9% in the past three months against the industry’s 9% rise.
Q2 Insights
This presently Zacks Rank #3 (Hold) company posted adjusted earnings from continuing operations of 65 cents a share, outshining the Zacks Consensus Estimate of adjusted earnings of 63 cents per share. However, the bottom line dropped from 66 cents a share earned in the same quarter a year ago.
SpartanNash Company Price, Consensus and EPS Surprise
SpartanNash Company price-consensus-eps-surprise-chart | SpartanNash Company Quote
Consolidated net sales of $2,312.4 million rose 1.7% year over year on higher sales across all the segments, each of which benefited from inflation. However, the metric missed the consensus mark of $2,357 million. Retail comparable sales rose 3.9% from the year-ago period.
Net sales at Wholesale rose 2% to $1,633.4 million, mainly owing to the inflationary impacts on pricing. Retail’s net sales increased 1% to $679 million in the reported quarter, mainly due to the inflationary pricing. Also, lower fuel prices lowered reported net sales by 2%.
Gross profit dipped 0.5% year over year to $352.4 million on lower volumes, partly offset by gains from the merchandising transformation initiative and increased margin rates in the Retail segment. Also, the gross margin contracted 40 basis points (bps) to 15.2% on lower inflation-related price change gains in the Wholesale unit year over year. Also, LIFO expenses declined $13.2 million or 58 bps from the year-earlier quarter.
Moreover, adjusted operating earnings came in at $40.4 million, which climbed 6.3% from $38 million reported in the year-ago quarter. Furthermore, adjusted EBITDA grew 7% to $66.1 million.
Other Financials
SpartanNash ended the quarter with cash and cash equivalents of $16.9 million, net long-term debt of $536.6 million and a total shareholders’ equity of $768.4 million.
Cash generated from operating activities was $49.7 million during the first half of 2023. Moreover, capital expenditures and IT capital totaled $63.5 million in the same period. For 2023, management still projects capital expenditures and IT capital in the band of $130-$140 million.
In the first half, management returned $33.6 million to shareholders via $18.5 million in share repurchases and $15.1 million in dividends. The company returned $33.6 million to shareholders through the reported quarter. As of Jul 15, 2023, $25.5 million was available under its share repurchase program, expiring on Feb 22, 2027.
2023 Outlook
Backed by the year-to-date performance, management reiterated 2023 adjusted EBITDA and adjusted earnings per share (EPS). Management now projects net sales in the range of $9,650-$9,950 million versus the earlier guidance of $9,900-$10,200 million and $9643 million delivered last year.
SpartanNash still envisions adjusted EBITDA in the band of $248-$263 million, compared with $243 million in 2022. Adjusted EPS continues to be projected in the bracket of $2.20-$2.35 versus $2.33 earned last year.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch ANF, Boot Barn BOOT and American Eagle Outfitters AEO.
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 736%, respectively, from the year-ago reported figures. ANF has delivered an earnings surprise of 480.6% in the last four quarters.
Boot Barn, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 5.1% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 7.2% from the year-ago reported figure.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
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SpartanNash Company (SPTN) : Free Stock Analysis Report
