SPTN - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the SpartanNash Company’s First Quarter 2018 Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Rachel Perkins from ICR. Please go ahead.

Rachel Perkins

Good morning and welcome to the SpartanNash Company’s first quarter fiscal 2018 earnings conference call.

from Officer are Financial and today and Staples, Officer. call Executive Chief Mark the the Dave company President On Shamber, Chief which By the approximately have should p.m. went release, X:XX now, at out access yesterday everyone earnings to Eastern Time.

please website a at SpartanNash’s days. for recorded a approximately www.spartannash.com/investors. For available be being website replay is XX visit will earnings call on of the and copy release, This the company’s

remind discussed forward-looking inherent and everyone general today’s Before may retail plans amongst These that results results external food, operations these made differences and we like in from begin, and and plans, distribution integrating competitive during contain we uncertainties. materially by Internal projections involve discuss factors cause the companies; implementing call statements pressures the to will and that conditions. strategic and that uncertainties statements. would forward-looking management Actual forward-looking include, in estimates economic significant differ comments statements. expectations, may such may among market and others, risks

comparable was release, the yesterday. market now closed A pleasure measure And after information measures of to included information on investors other financial turn information intention with certain in should GAAP company’s as SpartanNash is statements. statements. the filings non-GAAP of includes the the presentation Regulation these metrics required and update the issued statements forward-looking performance. the in XX-K other the in and found This over directly obligation associated release, be can to to and these with company’s undue my SpartanNash’s the or reliance forward-looking the the with to SEC. any risks period any Dave. or comparable and reconciliation Additional not it’s Because earnings uncertainties, forward-looking factors financial place disclaims revise most to about investors measures company’s any call quarter Report financial uncertainties provide by useful on which risk company’s Annual Form earnings non-GAAP G first and about

Dave Staples

today. before key as everyone results call for for Thank overview your our our with are were and an of pleased you, line open morning, additional well by and will Rachel. provide on call today’s operating our Good of then quarter us performance include brief we quarter strategic saying results in begin financial and you as we I will will objectives. the the as with detail financial first our questions. our on financial update the on our delivered for The expectations Mark we business. format joining thank my

a quarter and extensive We in positive strong building remain Our flexible network, diversified on and network. with brand on with fresh priorities segment segment. deliver solid distribution well of sales, comparable performance and positioned are store that a distribution continue strategy X.X% included strategic a an in military to X.X% our to consumer. service and executing supply first from to continued customer businesses our execution a benefit our sequential a innovative increase response improvement Each in and top customer increase sales our in sales, excellent line retail growth, food solutions, today’s national believe value-added distribution we our of strong retail and resonates that innovative to company with extremely offerings, chain focused

as pleased a differentiated we continuously offering, to customers service we sizes. this of all retail with take driven growth segments food operating remain more results by offer let’s sales incremental existing the begin to was where across our during Now, we look performance our to with the X.X% expand a initiatives strategic largely our from at sales distribution, Beginning as store and improve very operators quarter.

after large customer experiencing when significant financial performance volume the its Our processing operations loss of sales are improvement and we significant respect in to has even impressive our in profitability consider cycling in still With the productivity experienced you distribution difficulties. food is to a Caito, more reorganized operations we quarter. a that that this

As steps the bearing the support quarter. have progress at team improve these the discussed systems and Caito’s report quarter actions and that the had improved are sequentially a I as continue last margins to pleased Caito taken management number results quarter, hoped. first of fourth we we to from to we am and into

the Additionally, of sales in team in this companies. foodservice the food manufacturers interest the see prospective implement in these we capabilities ranging We partners year. by operations, we the space begin and we enhancements to as see productivity over from remainder pipeline our optimistic increasing as traction of expect further our from and significant prospects developed remain variety about realizing a retailers,

our During part of the the featuring event to latest customers trust annual proud have model store held I their quarter, I to design marketing, this customers. believe our at store and be merchandising first these us held our of that we our was one of independent again a store, allowing we in created level programs. relationships. am event demonstrates once of announce

the a business more marketing develop commitment merchandising them from programs peers. help events their to storeowners that independent in and team our the will have the customers’ of at managers well in as importantly, that the able to see and last firsthand, three customers new these their that and different model move of partnering like environment new to were was response now as store Programs ideas and our one store with held they solutions attendance a demonstrate We providing fantastic forward. succeed is innovative location. current fantastic to our Even

Lastly, keeping operations. variety, are enhance our team product improving making investments we our network, our is also chain better quality while to low, of efficiency, customers our and cost optimize to supply customers helping primary focus their

with we existing As sales a result, continued distribution our food anticipate growth strong customers.

the program. Southwest of military segment, deliver we in continue from expansion combination our private sales business improved earnings and as brand a benefit to to new and Turning we from DeCA’s of the

continuing While costs to the we manage increase volume segment difficult new to ways effectively environment, efficiency. drive and best-in-class operates find in to are a

close products, So the latest we ending have to period year, products introduce private this new the approximately with to with brand in far XXX system. DeCA partnered XX

the We with achieved the expect DeCA we of cycling third are highly in comparable in segment, in the store an retail partially geographies. the competitive release sales expanded sequential the began XXXX. throughout across remainder of growth of this of business offset and the XXXX additional improvement In collaborating in the despite a a product quarter which environment, to Southwest,

driven upon built brand new have positioning, and pricing introduce ongoing our We strategies to convenience solutions. initiatives products,

resulting offering more design trends related an health in repositioning completed and price, brand have fare with and focus. today’s for offers tune our concepts community to We banner, value of a beyond the wellness, family in unique

first results few expected, stores, We anticipate the and are even have If continue where launch expect results we year. more of initial excited year. activity been concepts very complete four to remodel next as this test and implemented these our these additional by remodels

Fast expected we XX% Additionally, end the and click-and-collect now by and remain and our committed our to of services. as locations are online to service retail the curbside pickup Lane, XX% and Online well our of stores as reach of XXXX. available other of technology pickup over ordering are over expansion ordering for delivery

while technology I to checkout locations. allows experience. to improving will technology they scan the the in with bag and that, This turn will also the cell significantly call customers a Mark. We shop testing And use scan phone certain now be store, items over app,

Mark Shamber

XXXX compared diluted in per EPS the fiscal sales billion. Adjusted first company of I EPS which over in XXXX, an our EPS. like the of came Dave. $X.XX the increase results Thanks, of in for EPS our growth quarter to financial billion, $XX.X my increased or in before diluted quarter the $X.XX quarter quarter diluted XXXX. first fiscal begin the Net XXXX’s diluted by the into comments to first first share detail. and greater $X.XX XXXX’s GAAP share of would million to basis, highlighting at quarter quarter sales sales for in a quarter same of X.X% fiscal of $X.XX first earned was diluted On $X.XX per adjusted fiscal delving first

both basis sales basis. to being standard, the contracts reported XXX, certain food gross are reminder, a on distribution new segment ASC reflect a compared As in reported previously the net a periods in accounting whereby different headwinds from by increased billion million by $XX.X by X.X% prior largely to to partially or a customers food our driven $X.XX customer sales offset businesses, existing lapping distribution reorganization. net sales Shifting on year to our

activity, the quarter, the commentary basis, at the of the over first deflationary our towards of dairy, food modest department the produce. this as department meat showed X.XX% inflation year’s sales decline sequential approximately consisted in a expect heads normalized Excluding experienced of inflation compared remaining impact increase quarter. a from On basis of the XX couple drivers quarter. of rates in points we and Consistent in levels. declines. during From decline to We distribution X.X%. we XXX primary historical with the inflation it points points quarters, our sequentially to up XX by fourth of year-over-year basis are inflation coming a basis The net perspective, more in increased last prior

fourth of startup our middle phase and items. the totaled of as are by the operating out versus and In now Adjusted of those operating both income $XX.X costs expenses distribution million of partially $XX.X the in higher First operating portion programs the supplier in M&A the $XX.X losses prior quarter million for earnings. approximated year’s Fresh million year’s offset of GAAP transitioned losses a of operating business integration and and reflected previously prior million and adjusted and certain Kitchen Caito’s by impacted quarter income earnings of business. a in the result the lower shift food the transportation quarter, mentioned timing lower Caito adjusted quarter $XX.X

partially to margin increase basis, $X.X from by first costs. On Incremental growth XXXX’s $XXX.X in on increased Our the in $XXX.X military quarter declines the to quarter. earnings revenues military a lower fiscal increased or net totaled of operating private year’s volume, our earnings comparable compared quarter the by sales the offset of as couple earnings last in $X.X XXXX commissary first earnings to to first locations in million higher the of sales quarterly first prior X.X% improvements million the conference additional segment’s first and in sales brands than million increased by Consistent from $X.X serve. new with sales million, quarter sales more $X.X the compared the the commissary calls, segment’s million for prior costs from year-over-year healthcare an basis on earnings quarter. for $X.X to million million Operating adjusted obtained commentary offset in $XX.X million million an compared quarter. to volumes military year’s Southwest we $X led business in also of transportation and

expense Adjusted X higher loss quarter the GAAP a stores closures million segment’s $XXX.X working retail million on the an $X.X prior first earnings in use million, our during closure at offset quarter sales year. prior stores. average sales million quarter prior for the in and of was million referenced $XX.X quarter. quarter. compared the by a the $XX.X $XXX.X operating or the cash cash of operating versus of Finally, margin sale due prior and totaled $X.X net perspective, in well costs. to with came finished first we quarter during year’s we first stores, basis, as over reported We for increased retail restructuring the the flow closed a the to approximately period of for XXX the prices first working XXXX. rates year. year’s the fiscal we retail related higher in million first million due $XX.X debt balance consolidated a with and in by same million The capital flow sales in generated XXXX operating the to million combination million that lower fuel. the $XX.X store quarter increase higher healthcare versus million a higher year’s in million store reductions of earnings in in last million million quarter From during have a decrease to to compared our interest levels of of for comparable at $X.X previously first of store $XX.X store million Approximately to partially In XXXX Interest as investments cash primarily the in we the XXXX’s with than of rationalization sales and $X.X initiative, partially was first with operating $X.X of fuel due charges quarter. first of by declines. quarter offset capital generated continued these comparable retail $X.X associated year-over-year $X.X lower $X.X quarter the The decline driven as use high X.X%, the an fiscal of first Higher quarter connection the of excluding approximately end first segment to free unseasonably

we year, equates approximate first of quarter, This at totaling dividend quarterly share, $X.XX level. trading prior an XXXX’s paid current During yield per an cash increase stock’s the to the X.X% X% from million. of dividend $X.X a

at also our $XX.XX approximately average repurchased of price common $XX the We million of an per XXX,XXX quarter shares for stock share. during

the receivable million end by the above. inventory million share repurchases long-term at to end accounts net million decreased total levels with in the partially to XXXX, accounts Our being $XXX.X the at the $XXX.X lower offset fiscal and borrowings compared by of noted payable $XX.X and of quarter reductions

was Our end capital more the connection common X.X:X in down returning at as EBITDA to while year versus flat company levels, net long-term long-term with ratio also paid effectively repurchasing stock. debt normalized debt-to-adjusted working

to generate free – We as cash ratio we we debt expect improve will this XXXX levels. reduce to cash utilized in our free the to generate continue

press As certain XXXX. fiscal we and updating and the full of adjusted covered release, are for and sales fiscal of reaffirming the updating guidance year for components half XXXX our our guidance yesterday’s in guidance earnings other first XXXX

commissary the and year-over-year from in continue segment, segment, In the in our sales positively contribute by second contributions the the continue We existing to sales driven Southwest to in to primarily business will anticipate military operations. quarter. to comparisons distribution food growth Caito’s customers incremental

offerings. expects stores of as positioning expansion from benefit comparable its new stores our We improve remainder the ongoing from year run-rate company of will that over program partnership the also sales brand private benefit company’s of the the its DeCA. the retail will in with the The

share, to $X.XX in share and of million share and to XXXX. store increase expenses per of We million $XX adjusted gains, expenses XX.X% an continuing $X.XX excludes adjusted to startup earnings excluding XXXX anticipate of also operations costs. Fresh approximately from closings associated to per per continued $X.XX approximately EPS from be to Kitchen X.X% fiscal $X with adjusted This

from Fresh distribution expect effective $X.XX continuing we prior per the of range As earnings reflected for GAAP to reflects a the first of Kitchen year. I compared This mentioned XXXX. few From to the be and rate loss XX.X% startup a are share $X.XX now continuing of of in out in transitioned operations a diluted approximately quarter an our results of XX.X% moments through operations midway ago, from XXXX food tax segment. to phase reported the the $X.XX in perspective, its fiscal guidance that

to our for $XX also expect guidance updating interest approximately $XX to million be interest are and expense expense million. We now total

significant $X.XX results first the prior adjusted anticipate below prior the the $X.XX. will year growth, tax programs, due environment share For XXXX, certain of by of in partially customer of earnings the a per be improvement. share expect to shift reform We in the half Fresh offset of sequential that challenging to $X.XX a to Kitchen a launch program, be benefits and operations we year retail new delay of fiscal and earnings sustained per our below timing sales Caito’s adjusted supplier

million $XX that from will range million. range that $XX capital million to project over Dave. continue $XX for XXXX amortization of will to back I in to it the be and depreciation will and million to expenditures fiscal turn We $XX approximately

Dave Staples

grow improvements distribution segments the in well our our we have military and as highly a Thank drive volume conclusion, food to despite sales. ability you, demonstrate adaptability and challenging continued sequential to retail Mark. in as sales In environment,

provided we about Caito and seeing We in are are pleased to-date. offering the made the interest are excited the fresh improvements by with operational

will I like combined strength questions. back solutions your open continue are for that, the and stability to enhance customers, our would operator strategic confident enable for believe of and any and our we With As distribution with to develop we of beyond initiatives long-term call turn XXXX prospects innovative over for the our and new up the it to we extensive that our network continued about growth. and and

Operator

from Please go The [Operator comes Instructions] Chris question first of ahead. Jefferies. Mandeville

Chris Mandeville

morning guys. Hey, good

Dave Staples

Good Chris. morning,

Chris Mandeville

Dave, view am the And pricing feeling that in improvement then are I how cull I on of by going in take your margin as you EBIT the pleasantly stores hold? I comp efforts you the the how while going red, sales that adjusted in expansion quarter. was the retail and to front forward year? to just order surprised guess sustainable continue the momentum curious presumably some is into you maintain rest sequential marketing are all

Dave Staples

Chris, this well. retail group were pretty we quarter guess, as in performance yes, overall, the happy I with the

as we I There it’s I in of but that. before, lot I our competitive the pressure haven’t have markets past ability we a and right. pricing with is think to through we environment. demonstrated a think look operate, forward in happens It certainly the work nothing that’s dealt

you at the year, to remainder As our we improve. guidance our overall look for of the business expect

the operation the build it but are to of will going think our will continue programs of environment, competitive than the and even today. I over side on types be in things us we long-term, business, retail to a challenging putting an place the are we have I think and be retail stronger it

Chris Mandeville

Okay. some maybe uplift can guys context we actual remodels, you that were around the accelerate years? there with you recent in And program Dave, the out or that color to also relatively about you your as the potential of observed is mentioned happy any provide think

Dave Staples

that new a a differentiator program markets, to seen because don’t our our departments. I think substantial for into growth in our get us the really customer have across to we in much satisfaction in just want Yes. be scores going but the board one and is fresh too I specifics only really it’s

scores I think levels with the time. they were too in quickly really increased surprised and all increased how customer satisfaction to we even short our a such

we out. will little this very I if goes see we I to think thought. stores as you roll as would of it general double-digit mid to in I solid bit a give a increases say planned mean

Chris Mandeville

apologize And of this rest one in year, what inflation the here, you wholesale us last the for the outlook helpful. for I the of remind me, can for that’s terms bit but Mark, as Okay, potentially to again then for maybe just looking little pressures guess a potentially? you were are a split they ability offset wholesale to if did what’s it the to And generally, just bit sequentially? little slip I missing continue

Mark Shamber

finished to of I I the mean, putting day. to we are they in the also of that Yes. think we changing but expect what announcements I hearing up, been groundswell of some seems a sequential CPG started mean, companies, a see period have the of not price little that but through be for companies, the folks just kind we saw CPG the remainder from we also fifth of the some have CPG bit necessarily we by decline increases. year

calls see their will that to inflation it are the the into when releases enough comfortable so from sure I the we not slide a a folks necessarily deck these putting second little period think they to seen a a little when – little see continue that back think and our price recapture particularly bit. then that these slide the materialize, think to down I bit that I start but I haven’t as quarter of fourth see we of a to have as first it settle, a they I try the increases have will going half, target, but we through. get will to am of we necessarily I rise start into to not don’t for some expenses before incurring quarter push hold, takes transportation. of But out admit and these quarter of And I bit where to see are we then their plan to in read earnings first

Chris Mandeville

hearing, specific And to wholesale maybe whom in really your retail I to well these accept the as vendors at quick on any being you one are level, front your price, high one increases? and what’s looking follow-up of to pass locations maybe is able cost departments customers the as think it on sorry willingness for there, a just terms for the

Dave Staples

see And At would we on any as I it’s say, very distribution retail, is situation, predominantly, manufacturers. I they the price I will goes model unique Yes. say, increases say get where not people increases pass may the our not, pass in. just on, in price would on but increase department. they circumstances would but specific price from typically, pass would that’s it one competitive a

Chris Mandeville

and again see next you Thanks month. guys. Okay,

Dave Staples

Thanks.

Operator

Paul from comes Bank. go of Trussell ahead. question Deutsche Please next The

Paul Trussell

question. Thanks morning. Good for taking that

So the that we And how penetration wanted expanding, brand side, that’s maybe that to SKUs give maybe think the offering? then and and just update if can provide reception DeCA the just maybe and Fast program? with how about opportunity on an a just should around start private Lane detail to for and retail customers you little program bit more the on

Dave Staples

let DeCA. Sure. Well, start with me

DeCA provide range benefit a is because that our benefit our the continue it our objective truly to military heroes. and strives view So benefit continuously products heroes, how as do military a Their of for offer relevant continue benefit. make to full it is they to to and heroes, they a

every reviewed their that And missing. a realized brand a their so at grocery to that they that, they operator offering they couple didn’t realized have somewhere it normal was of by I participants penetration they brand And years they shopped, XX% should. private range. as as realized is their private component how And think going ago XX%, that see offering, looked in not benefit

awarded and grateful put we and opportunity, then to the were supplier very that bid are brand out to and private we out be went XX a companies exclusive they bid which And some for. so they DeCA

a brand is that to points XX% math sales I that what them launched now it over of to it up been you potentially, given a ramping on to will It will next potentially could be that the that last sales years. if it like means it’s up think year, their it’s be items. do about I and few the ramp over time billion XXX $X say

I and as that year they the as incremental we that the this units this significant come ramp Certainly, private for national we with expect a get private they rollout as is to really are brand. continues up, to to momentum they going some to think growing potential the it experience there expect number certainly of out keep brands behind cannibalization the brand.

overall going customers their is belief products, Our this somewhere and them to from they will actually be else. they a their buy where benefit to are people money attract are to spending

So I positive think this DeCA very the long-term for for potential is overall.

question is So that looking guess for? was concerned? as Does far what your were that I help DeCA as you

Paul Trussell

It does. you. Thank

Dave Staples

Yes. about are we the as as excited and Lane, totally response. And far retail Fast customer then

computer a get, by their a provide or measure to phone Lane a receiving the sample satisfaction. code experience their a on And do telephone every rate with their and a can our we that that a responses a use experience. us experience perspective, based well, they customers – are on about or cell we how So, our survey continuous on we Fast We opportunity customer then receipt our overjoyed either was. random from provide of respond customers to to they

customers our area satisfaction. on of somewhere rating X their X of a in of XX% us out have the overall We

that. So, I don’t much could to think than we better done expect have

so of anybody to keeps incredibly good. stack trying against we good really far spectrum our our for We is who the well so across up do think this us. growing feel it and ratings ratings, and so And so,

are we perspective, excited. pretty that from So

Paul Trussell

and you Thank of luck. best

Dave Staples

Thank you.

Operator

next Wolfe The go of question Research. ahead. from comes Scott Please Mushkin

Mike Otway

taking guys. questions. Thanks Hey, Scott. the Otway is morning. for Mike for This Good

I things. of guidance, just First, on a clarify to the couple wanted

first this delay half this lower outlined first to and least guess terms the the in the customer program what the program of guidance, timing you in is quarter versus fourth terms is the new at change – in supplier delta the it you in all quarter? I the quantified, With due half,

Mark Shamber

really the in from delay the in were, perspective, compensation March the is quarter north first our first more to us the that our I quarter customer to say felt sort certainly related impacted were would tax negatively where $XXX,XXX program which of would is we April, share-based vestings I sort we impact from anticipating. the and new results change we a supplier not say related were tax piece. No. but that of which program than a of – softened in that a

sort so other we quarter earnings given what on in the is fourth that’s And factor, of the from there February. had late an update call

Mike Otway

And maybe bit that the Okay. the outlined year, since full two? those fourth between guidance expectation kind How we second there maintained of think I then you about than quarter. for guys guidance the is in half interplay a guess thought stronger you when you should

Mark Shamber

here, I any say first. not sure as always I sit had I can half think Well, stronger than that it’s any given the than that previous we felt that second I less more the was we going or be to guidance. am

of the program played expectations out the how and first earlier probably we start the to And that there, half in quarter, quarters of we we barring that customer start – internal the second a out comfortable to we now will month we this we had had thought gave June. we referenced. I wanted in we have guidance, the clarify where but think sort expectation play the on wanted quarter very range we still feel when with that that first out the to as it because would on referenced, our sometime line tax expected update with like and looks I it the there just to impact

we to we needed to there sort that of a clarification that felt folks could And quarter. we we bit so give of first the we reported – felt now a that

out previously the expected impact second say half So, the certainly bit other the delay but one expected, in way quarter the we has significantly the going first and the a wouldn’t that or to little played – program than moved what had from is quarter quarter. to I we from lower second second due tax

Mike Otway

the food on then distribution really That’s guess I question helpful. business. second Okay. And the

I think that from the growth incremental Dave existing driven was have mostly sales may by customers. you said X.X%

I guess than am of really my positive to volume health these this comping is understand just additional you folks? is quarter that So better trying that few distributing you have the or doing I to Are are are they to, businesses they question are it the all supplying they guys the last quarters? in

Dave Staples

answer. I is think there simple one no

it have think it I very the then some think have I customers always I mean, doing customers think our And I And base and we way probably base, customer that’s are are very doing that well mean diverse. we has our they very we some have think that been. are challenging. some independent I and finding retailers. guess have entire fine. high-end that we are I I customers

have strong middle-market retailers. very We

We towns, The base, have county guess, smaller with it’s our that are seats, I customer well. tourism sized Metropolitan some the good markets predominantly more strong is news value retailers. doing fairly markets, of

is pretty positioned. So, our well customer base

So, answer. it’s I think not a simple

hanging I think pretty we And well with are all-in-all, in I think I there environment. types are of working they our in customers. like all different well this say,

Mike Otway

I the both. you, Thank color. appreciate Okay.

Dave Staples

Sure. Thanks.

Operator

BMO The ahead. next question comes Capital. go from Kelly Bania Please of

Kelly Bania

with food there quite just think Also having you to the margins down in from guess accounting noise still Hi, but good there, distribution my are wanted questions. I the for bit, ask the growth change. morning. Thanks the it’s about some taking I a is segment,

similar we some and expect QX margin there just you can through drivers the of compression us in beyond? and walk some So can if

Mark Shamber

are thing well, mean, I think one Kelly, to I factor when that the margins, let I talking is step mean, you back. I me a take Yes. think

net on the standard it margins, we the food basis. versus reference help that the accounting distribution to the are would reporting hurt On margins a new because actually

we four and still really the at that improvement, and our for Kitchen not adjusted what’s expect sequential business gross not profitability as was of third is numbers quarter So quarter referencing driving in the towards that relates to is from think periods first turn money our quarter, the in are sales the it, sequential we previously looked on the of adjusted But of and but margins out we there rest year-over-year two a get side it much we and of income compression an the perspective perspective, things. been looked is it you that’s side, as probably on biggest is to the Caito I necessarily the just if as And all that second into Fresh the a statement – losing that all are driver end the GAAP business are really getting think completely at XXXX. the the from you as had out. being of margin reported I of being the business, because it

Kelly Bania

Okay.

So, you Caito maybe about of business, understand that, could just core underlying at? where the the how with the And think kind us you margins of do on long-term, other side can help the stabilize then those? you feel margins

Mark Shamber

Yes.

feel at. to it core where to think mean, the perform are I they they I So and relates relatively margins, as with we comfortable continue where

significantly not a kind the We a of little to little pressure bit, but nicked costs the that’s have from bit business of it seen us there. relates enough core as of some transportation

it dilutive the with I and On it’s significant that that now, manufacturing would business accretive our to say be think margins our segments, the it would think is of [indiscernible], don’t at up we really operating business over leads the the in be of when expect Right portion the line Caito levels item margins side margins would stabilizes a some gets it that I the and their to and expansion. when running the there. business, to so core their I distribution

that that dramatic got the shift some business lead continues of existing of improvements to expansion well have in pretty just have to we Does there sort and a as increased to as profitability from course over both business the that time. improve sales answer? help us volume over So, would looks as the

Kelly Bania

very that’s you Yes, the I cycled the at one guess X% now. helpful. about reorganization, customer for think then is segment, if which I more the is And I on growth inflation. distribution mean, almost with X% adjust just

of mid that single-digit of kind So for for Is that the I growth still quarters? division expect? couple next mean we reasonable to expecting are

Dave Staples

would I yes. say,

Kelly Bania

I ticket more guess you seeing one just retail? that any traffic inflation, you difference or the are inflation negative composition then the or did in and X.X% And give that distribution inflation any of Great. versus ID, on the retail

Mark Shamber

relatively to the points, points this points that basis and retail in on we the I basis, little basis quarter, first on XX XX we so year, year-over-year are a first X lower. basis inflation. a year, about distribution points move fourth are basis about is flat quarter quarter, quarter-to-quarter, basis but retail on Retail from XX. side, last was mean, roughly XX mean, I XX deflationary points, our was up bit retail the the the of From

the about a So, of points. retail it’s side, XXX on basis swing

Kelly Bania

if Got I one Maybe more can. it. had just

and investments I I business. back far, early be effectiveness you wages How step of use proceeds time? feel still the over of about the will how it’s your some those you tax that and do think the and mostly you retail about know into so As think measuring in and of

Dave Staples

They probably think targeted a at distribution orientated. retail, So, to are you two. beginning this just and price Kelly, yes, said, They the are point to part are investments our or within significant but wages. like I really last also month mostly wage

I the with will well way our them intended year so our as turnover which measure satisfaction as And we ratios. scores, as are we monitor every associate think

sure competitive and our perspective. results through the are our value price to of ensure that of to we if big adjust value the side And that a the is we will pricing. being offering wage part to of it, are to we our we so associates doing that measure our is one and then that on customers, a very retain talent in categories we part competitively objective what it’s the that are best compensated so a ensure product make And

Kelly Bania

you. Great, thank

Operator

go ahead. The Please from Gilligan Barclays. next question comes Ryan of

Ryan Gilligan

Hi, the morning. Thanks taking good questions. for

the talk does clarifying about improves environment Just all at at guidance, and it you retail can trends? on assume competitive comp quarter-to-date

Mark Shamber

a It doesn’t this pressures sort really have dealing of with change perspective. I point. mean, of we at the for some been year any reflect almost competitive our from

relatively I then to as of expect and it’s been waters late navigating we I through change. not Ryan, so was? the And there, further trends any anticipating really part of second we improve sorry question the think successfully those have So mean, continue to the see

Ryan Gilligan

quarter second in comp so the far. Just trends

Mark Shamber

of I from in I up, little They say apologize front have would where we a they me, first improved are the I so quarter. don’t on that, right bit number the have finished but but that

Ryan Gilligan

Got it.

Okay. that the And have added then sales Caito’s and you on pipeline, been sales so the what’s have of new just added? run-rate customers already this if year the

Dave Staples

are say It’s to second yes, about predominantly now. beginning early Yes. early but to going beginnings it’s And think see incredibly it’s are that And the nice I and as end beginning we to progresses. quarter here the year but of think the had in so really some up. happen I it’s in some we new we excited to I’d I we I date, really phases, we keep are going with believe customers. don’t growing pretty think substantial where think have

Ryan Gilligan

That’s And new with to existing customers customers is product line? helpful. just of kind SpartanNash or the it and mostly growing

Dave Staples

expanding the I say ones – either at private customers it’s with Caito guess, line. I or point, expanding the SpartanNash predominantly would and customers this

ours for product the hasn’t producing are customer we who before. a However, of been necessarily

interest as are in the to – we expressing in our So food have. – of in may an are the manufacturer and being manufacturers of their customer discussion by some component a today, who are to a people some we an cases I manufacturers existing a offering product asked of part actually mentioned as use earlier an

products, good. in manufacturer we end we use are may guess, the that for our I finished essence, product and their in So say our producing mainline product

Ryan Gilligan

That’s though And label expect to second offset the on comp the be just then half do segment, interesting. completely military SKUs decline the DeCA? sales at up Thanks. you private year-over-year incremental clarifying the in

Mark Shamber

quarter, same would the Yes. rate not I but would say, yes. necessarily yes. at I maybe first say in the

Ryan Gilligan

segment, lastly bigger XX decline? on opportunity an then margin question military XXXX, picture to Got have it. is just about the come EBITDA that margins since or so recover some down there points And basis all a

Dave Staples

I at of factors of some the mean, you have to our look right. business,

mix overall to fraction as rates. and this a is higher than carry where that over believe, I think type our we bigger lead, a what our that food so will has And as that margin as continue So more period comfortable it see offer, grow think has that of as I and we part claw margin it potential the earlier, get with I of becomes more we alluded some back. business, to we that Mark processing business and that to and changed mix. of could

Ryan Gilligan

Got it. Thank you.

Operator

Please Northcoast of question ahead. next The Research. Instructions] [Operator go comes Chuck from Cerankosky

Chuck Cerankosky

opportunities food confident but next buying? the look and about that If the in you out but think mix. maybe got if year, this returning label and are for the time, morning. more you forward not about up seem the Mark, same past? pricing, distribution the move more to Dave forward the margins fresh inflation forward going entering bit thinking what that buying at products in You is Good degree Do year, you it private we CPGs has a something helps only

Dave Staples

as the it’s you inflation, going I progresses, Yes. happens when of produce, the are it’s where modest I does. distribution we a a not in we we which become than buy yes, company your hope certainly have where mean, And been always as it a as has predominantly is forward departments as years been. inflation by year a opportunity in does years think and inflationary say, believe Chuck, you buying had the part environment, I a bigger get what back more whole of driven to fresh very right. difficult to in deflation, we lot you difficult. know, it’s

So, strategy. a that’s usually not good

I that certainly a center store, inflation igniting center more does if across the So yes, store, bit think that an little become could we get opportunity.

Chuck Cerankosky

you. Thank

Operator

Dave the remarks. any Executive Officer conference question-and-answer like turn session. Staples, to Chief and our to I would President back This for concludes closing over

Dave Staples

speaking In to participating look I conclusion, to and today quarter. again of we with just forward Yes. all like you next thank for you

Operator

you for Thank presentation. today’s concluded. attending now has conference The

may now You disconnect.

SpartanNash (SPTN) 1 Jun 182018 Q1 Earnings call transcript