SPTN - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the SpartanNash Company Second Quarter Fiscal Year 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Katie Turner. ahead. go Please

Katie Turner

morning quarter Good to SpartanNash the Thank year and XXXX second fiscal earnings Company you. welcome conference call.

today President was at Eastern Officer, have access On Chairman issued Financial Officer. Vice yesterday call from the everyone are Chief company Time. the should now, Dennis President and and Interim P.M. Mark earnings and approximately and Executive to X:XX By Chief Shamber, Executive the Eidson, release, which

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

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

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

Dennis Eidson

morning, second Good to improved then detail provide financial provide joining a results. And you will overview additional us quarter strong Mark review Katie. today we our our discuss Thanks, quarterly appreciate on outlook. financials and quarter everyone. brief second of our our results, some XXXX I’ll

up some the we’ll Finally, for questions. call open

proud our as as unprecedented am to I a food the the they associates While incredibly continue we entire we result heightened consumer with including serve times of of military support strength the the distribution respond team of communities COVID-XX. to retail, resiliency and businesses, of and demand our

on team, those the priority of Our driving well-being as every safety our business and ensuring our particularly forward the frontlines day, as our well remains customers.

drove sales store consecutive million of of we measures in sales and distribution, we increase supporting year, quarter. in our positive $X.XX observed year incremental over of pleased direct of resulting our industry-leading strong as additional strong enhanced reduced Net financial remainder representing generation of be have was execution robust associated results During our over the even of Based distribution expectations to-date, growth year XXth our quarter increased the resources an per COVID-XX, The consecutive share, the long-term indirect adjusted from today, to increased prior the were for our ratio. year. of an continued fiscal with $X.XX Retail debt costs year growth. the quarter well retail in the customers. COVID-XX the cash fourth $XX the the existing leverage billion, quarter impacts resulted for of the our from quarter, XX.X% the incurred sales an compared for for portfolio XXX% growth well maintain includes of to This experience second further together as EPS This with company comp quarter we and of to of the as support effort. X.X% impacts in paid quarter Food prior expectations. results to sales volume our are food of expectations profitability the raise to as consideration net guidance. and solid we remainder ahead strength with and guidance on our full XX.X% the down safety

due consumer distribution demand retail consumption segments, guidelines, Federal driven a personal well at shift in more by segment and more to retail business quarter food quarter, to and second continue behavior response first with Similar little the in state we experienced to for as consumer evolve operating our in environment our volumes sales concerns results a safety. pandemic. home connection the to in food on detail, higher Focusing to and consumer the as

sales the to our Turning sales quarter in XX% to the quarter. very the continued with Retail be approximately second in strong of comparable of first the trend beginning segment, the period of

the comp have the low quarter and Our throughout the into remainder somewhat double-digits. recent weeks of leveled stabilized sales in

as compared quarter, prior second local trusted We a to have pleased to continue consecutive towards gain are year have the to consumers gravitated share supermarkets. market for

consumers new a now We by the household as serve maintain actively supporting to evolve. are working preferences proactively we

over are ecommerce sales and growth year by our This the For new these sales driven increased in quarter, both prior for X.X% and locations quarter. XXX%, customers was our to of the existing accounted compared solutions the offered. ecommerce for

Private-label for store well to increased also along long-term products, in We brands. inviting number offering free of we and and to customers look price our prescription in national for private-label are this products us increase positions the and quality pharmacies. a quarter, segment. with online mix unavailable also accommodate alternatives fresh the were of same-day sometimes XX%, consumers at the or home medications believe from sales delivery valued atmosphere last over our national foods, mentioned local, staffing Retail shopping of significant in levels up I As as

second the Food prior Within segment, for to XX.X% quarter. the increased comparisons Distribution sales the year

chain the supply to in well segment. clock resulting demand continue from own around volume the teams support the as increased as customers, sales our work external surge Retail from our to Our

restrictions in the the sales the our restrictions. with Military quarter, prior limits comparisons restrictions were environment commissary Military June sales the slightly than in At of While Retail impact decreased operations, COVID-XX. bases to and beginning at on supply current operating sales of of other highest partnerships delivery shopping travel on significantly the where access export to second with capability other base, we on those suppliers year only chain currently segment, than tests sales. and reduced quarter, on limitations second the offset and in XX% and more due the growth by More related associated an are commissary level however In support to beginning alert segment of our health the for the access, base operations. of gatherings X.X% domestic base impact this resulting conditions, to the the reduced have products behind distributors having continued in to lever efficient

commissary with volumes Our reductions restrictions most seeing the analysis that significant bases in average. of indicates XX% on are

of to forward. monitor of them close timing and We going continue are the with serve DeCA reopening communication to commissaries positioned remain domestic in to well

to additional of remains an Chief mention a Finally, Directors process to company extend summary, respond days. associates our I of that priority XX Officer customers up with with the Executive the the safe collaboration In In the time, and we have the the period the Board the to to to the would associated team challenges and to from organization and interim across identify to virus. our agreed while incremental next focused term for demand ability are of ongoing. our I my to continue like mean keep remaining pleased our of agreement on

is for expectations the financial for reflection XXXX now our to I’ll are first on the team the positioned our the turn a over being year financial the achieve fiscal then to outlook. increase Mark ability pleased we review. half of and to call strength to the Our

Mark Shamber

today’s call us to joining and welcome everyone webcast. Thanks, Dennis. on And conference

the net fiscal quarter, quarter, performance, target fiscal million second an Our below to leverage to business rate labor and quarter in increased $X.XX in at million Adjusted EPS $X.XX GAAP Shifting fiscal second higher quarter an diluted expenses increase of second share year’s which share XXXX materially of particularly incentive in to the compared of target of million. were higher increase certain XXXX, compared or of $X.XX the at to $X.XX incentive supply $X of XXXX associated sales versus prior increases quarter profitability. in incentive our The expenses, to profitability EPS per levels fiscal due Retail compensation diluted, for in increased operating in of to second or quarter the the costs. of retail the levels. X.X% of in in volume XXXX. came resulted target in $XXX fiscal year’s compared the $XXX increased to of and to came quarter in store fixed per above sales sales for quarter year came versus was higher quarter, applicable net adjusted $X.XX as XXX%. current compensation EPS $XXX at current segments, increase the of served diluted and chain second loss share prior share The in from $XX below a compensation XXXX metrics, XX.X% Significant performance our compared in billion. with million partial the per sales XXXX offsets for billion second by a XXXX of per

store in market from with sales store XXXX, These food over to in fiscal the acceleration shift sales first towards the benefited second for COVID-XX, share. the the increases from results Our quarter. and Comparable reflect home the sales XX.X% for our of quarter. of trend comparable ecommerce comp improved also our at in gains XXX% sales associated reflects of quarter XX.X% an

observed start benefit continue at than We to of the sales, at quarter. lower increases although a second the rate in from EBT

by we and than increase. fresh for associated driven almost of inventory the cycling $X.X for segment an million was million with shrink, XXXX, associated $X.X in the in volume sales margin including production charges prior while operating $XX.X quarter period in rates Food of and second in increase business. reported measures. expenses XXXX COVID-related of second to as in second Second chain operating year the the exclude prior under earnings to in year quarter and incentive operating fresh release. the compared Retail GAAP sales million. partially in fiscal to working the by quarter Military X quarter interest X.XX% continued growth The XXXX. income in compared as sanitation and either capital reducing generated $XXX the as limited quarter Food the prior $XXX yesterday's Adjusted by level by earnings in and Dennis more the in an and increase increase business, contributed measures, second the with higher increase flows by to that to including higher expense million with to changes commissary quarter get the rates impairment many compared the earnings was compensation or versus The the impact operating additional Food results rate million, of of detailed offset quarter, decreased higher $XX.X as second million fiscal also improvement in the improved second the million. to of Reported the production asset the to year, entirely compensation quarter Distribution the quarter additional driven to a improvements decreased current totaled operating higher although compensation adjusted prior $X.X million cash quarter. and operating to in base XX.X% the expense by second totaled due year customers. in improvements and loss items in lower Food increased in Adjusted The debt Table additional revenues the higher our free $XXX adjusted compared segment thereby commissary. Distribution to during resulting the million including increased not $X.X were from improvements million XXXX, for expenses frontline well compared well in cash capital. in profitability access working average quarter to in by in improvements quarter the compared $X.XX to COVID-XX, $XXX supply as fiscal of negatively basis as of in compensation the lower These an impacted XXXX, Distribution sales million associates in compared quarter, allow of adjusted Interest the profitability Military the losses labor during by of prior and offset visitors $X.X half of meat, both press increase mentioned. consolidated incremental earnings resulted Net the of loss at who associates. adjusted prior raise period fiscal we Retail well $XXX.X quarter These reported year's to benefited loss alert the chain Partially accelerated income million were and levels basis came operating the combination of fiscal sequential million of in $X.X I was margin quarter in over COVID-XX, $XX $XX.X produce in or first volume additional of $XX health same these driven for headwinds. quarter. XXXX, Sales shift year. to rates, in same first prior associated X.X%, as QX million, period fiscal were just points, of compared driven offsetting operating also doubling primarily inflation to number costs. largely XXXX billion sanitation of the of to of in million million million a or million, as incremental associates did and of the were rates generated million. in due million bases restrictions while the rate the existing second and $X in quarter, and $XX.X to flow favorable same generation sales to year's both These second XXX insurance reported with million the XXXX, second in In shoppers mentioned, in second incentive second frontline of supply sales the the XXXX, of compared Distribution due an increases $XXX Inflation to profitability frontline compensation, of year. items variances income for impacts a last net levels operating $XXX the half year from significant quarter operating $X.X

declared in we the quarter, returned shares $X.X any second and to second of quarter. the million the company repurchased did not During form and the shareholders dividends in cash

second during the to $XX company ending $XXX million fiscal XXXX, quarter. long-term at year-to-date the $XXX total over during $XXX by million than net million including $XXX the debt the half quarter second in paid more Our decreased down of million, compared first the million as debt end at XXXX, of has

decreased net ratio X.X from XXXX, the X.X pay at just in fiscal the EBITDA of well times to million. quarter in to as strong a adjusted by long-term down, end of increase our debt $XXX Our below of XX% leverage debt-to-adjusted the EBITDA year-to-date second as combination times driven ratio

We X.X near-term to continue our make the and our we target leverage expect remainder achieved of times. to on pleased the have to are of year through progress

raising earnings are our we release, guidance. press afternoon’s yesterday in covered As fiscal XXXX

our projections Reported share as per consideration to continuing diluted share, prior to our share, company's with XXXX, fiscal We of prior from fiscal $X.XX adjusted pandemic share for are to from updated we $X.XX. our to to increases operating $XXX consistent year. range outlook continuing our COVID-XX impacts The impacts includes to observed the to projections million, of For guidance the expected earnings per the remainder as projected $X.XX prior per $X. of million approximately compared year-to-date, $X.XX diluted to $X.XX compared anticipate from of well from now $X.XX million, to now fiscal to to adjusted EBITDA million $X.XX earnings of in XXXX range $XXX per diluted estimated the from $XXX share $XXX per compared earnings. expect of operations this operations

and the range and in million $XX year to $XX for amortization capital continues now million to range guidance to IT million million $XX Interest to expected fiscal expected still XXXX. Depreciation million Our $XX.X XXXX. reflect fiscal expenditures $XX to of in for year. to $XX.X capital the fiscal are is expense be million from

effective now adjusted reflects be rate like the XX% guidance over turn I'd now, continues to while is to reported of rate Finally, XX.X% our to to tax call our XX%. to effective Dennis. back expected an tax And to XX.X%,

Dennis Eidson

Mark. Thanks,

So, XXXX I'll back well from appreciate the and with the pleased positioned our results call extremely are contributions future success. for over for some with turn we extremely entire and the Andrew team And am half I first questions. and up believe in open very closing, growth call strong that, and the to I

Operator

Instructions] Barclays. from Thank ahead. of Please first The Short you. comes go question Karen [Operator

Caitlin Howard

Hi. Good questions. morning. for Howard Karen. on This is taking Cait for our Thanks

I to market you think versus footprint that conventional gains market and and to where and your you how think close overall and competitors? the do performed math do grew your about compared First, you wanted by how within ask share overall

Dennis Eidson

measure the in that share and in quarter. each track about we QX, and growth metric QX again that use a retail market franking we AC Nielsen talked that’s We here from a as

and two row. retail fact share a the in going grew it in fact as total where geography detail all every well market happened into without operate we in regions we significant too think as our the region, much quarters store the the it’s a that in So, includes that, of on pretty that we and

don’t kind have of that terms growth, in that of think I available. metric type, terms we In size of the of actual

Caitlin Howard

for where quarter and third this any from to expenses some deviation extent the COVID-related quarter, rolling that related are estimates? Okay. And that, are your expenses to you And shake did off? expectations was on what then, out your there these of the

Dennis Eidson

I we and $X will million to quarter. Well, when the towards the – range that second that for were we would $X we in in about quarter, that came we or last talked be low that would of the second that expecting for that referenced be at we had the expected that we the range range second quarter that million say in of we quarter low-end and end the quarter for first

the we business. into a harder callout to the that quarter on is that now I think and pretty this, get were it running are impact be two or when mean, may we longer the expenses, doing we job I it a started of robust thinking this first those sort focused are we –

coming so, that probably the on the range of the in And I down third PPE would million of than are virtue we undertaking fogging are less the and that that $X of numbers centers. some quarter distribution costs as our the such say by sanitation efforts of some regular

the month or XX% those equipment will in-house this be costs later we will on probably do that reduce We so where in item. will have that that and that purchased specific just

So, that, below a we the would there wave or say not any million be I sure, level. probably not give second things prepared guidance I we But because it’s probably $X on we’d certainly are but think nature. are could not level, that that or below of be to whether

Caitlin Howard

Thanks. Okay.

Operator

Mushkin RX comes of question go next The Please Capital. Scott from ahead.

Scott Mushkin

Thanks for my questions. taking guys. Hey

- thinking one exactly sales start really some going as about of no to knows year cycling happen. and to wanted what’s I next strong know we term So, I and these maybe

we mitigate year? things to do you how really you when your sales that question business, on get impact to about think the next what the side? are it to how looks there is, of you probably Are can kind there guys of the So, cost you negative thinking And be as prepare do it? for

Dennis Eidson

for year. out what Yes, are fiscal right? just calendar And next year we I you we and are that’s naturally do, budget our year think, that would of beginning for the basically

much pandemic inefficient But feeling digest. there. believe third-party gain getting are We pain became over to going to business be a is sometimes we year. back labor thing manufacturers system. to to of how XX%, we we certain labor we next that too when so, have is of our that And XX% a more out we trucks figure of optimal, play growing us things And outside results trying out. inside we spending And and were efficiency there caused the the are inefficient. year that rates for of good had time are that in are are not are the of and you had the that’s so The to had going next fill from we lot some

The is, I about think Scott. So, things many parts of top-line had we some I weeks have away, go year we as biggest sales where all of particularly cetera. were the little first it we et those that next more get think a in And question think the probably like to I XX% increases becomes bit cycling normalized. COVID

those weeks. to going have a reduction against are We

will negative We those, growth a of in acute COVID. long-term if that to like are you, comp have to we the lines, trend the it’s it we home going believe spikes the at makes sense working that through on, we do – to And the core teeth out that you pandemic. tailwind hard got but strip against there actual as comps, are sustainable that really rate but may go though not to going what that with look we when be is business food something will comp we is

are of make that working hard on we together those can come we thing the nicely next from and year. all things So, think

Scott Mushkin

struggled we we strategic it? to the that penetration way, of Military are a all, could know more it generally for business for going that Is of My or should kind business? really, anything the special how thinking circumstances that at of there was make it’s business it with do we Sell more, help look Or it go-forward right that business. the on this we so think time. private-label question but do you in I of of this is idea now, I know, as for look talk – out second in while, certain My thanks on if there again bad question Military much Dennis. quite it that, company? business, headwind kind improve to about business a were less a a over you and

Dennis Eidson

I there can we it, are do Yes. think do things Scott. with

think, the problematic that going million I the in stream. business the that time $X from about don’t companies commissary be is range the gone mark has you is merged the that fact our we in $X low know, maybe to billion and this number really year, revenue as to control we

DeCA them efficient working we cut more on increase where that but ways ways to are We with find their supplier the we our can can community also support become we with costs are and and working potentially with with rates. margin

used space. enhance them can that DCs also only to platform DCs Military those those that differently the and profitability some can think get of there some there primarily I we think that been So, from SpartanNash enterprise. are options with some are productive things in perspective, do the more a for Historically, for have distribution I

of up retail of fact that, gives the for to So the it’s and be could felt to I distribution continue it quite like these are improve really all and what little color we kind on And able profitability. through we we changes there. you QX, things. might looking right? to a were be you end is sales base working restrictions some a positive of we unfortunate. the of But, to those served with are much these And a And like hopefully then, think we that combination bridge it

Scott Mushkin

I but Actually more, going get am Thanks. you. the back Thank I one queue. correct. into to That’s Yes. have

Operator

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

Stephen Caputo

Caputo for This Kelly. Hi is guys. Steve on

sort retail any third-party Just are And looking now you in terms seeing how talk driven business? about ecommerce relative you up you sort more mid-single-digit the in as of in and pickup core a leverage the if level than quarter expanded to is the XXX% of the profitability are there that’s of penetration, the seeing has delivery? differences can digital sales – at in and

Dennis Eidson

Yes.

accomplishments sales impressive on We really the of has are team of made from coming X.X% proud in to is store really ecommerce that, And the fact know part ecommerce me. those of the really, pretty the units you are our business. the

not you to operating big off far a or a ecommerce suburban important sometimes environment would think sitting more We and the environment are it’s and are or in it not more consumer doing environment, someone as you in rural be platform. you on are in an this like but right the ecommerce business. our on make whereas core don’t to environment, business, ecommerce profitable are we losing actually money the the I profitable are business, that, it’s we going

that. are so, And about optimistic we

do by some things from by. customers increase XX% that our the think, the to users are the using are came actually say are happy going time I up going probably the to are the we to use efficient when the They we to I Q, – more it other say seeing driving first customers and and adding portfolio, are that increase for And platform that in they are we QX that are to in forward, to number benchmarking that’s that XX% who new fact to mean, platform, continue we enhance continue with to XXX% extensively of platform. of COVID, as folks are it QX. time those the even of they use we had use goes are going significantly what I that and increase experienced, they prepared platform. become operations because that’s against the in were the customers fact more of have national to that saying are there and so am many that, so heartened our and many performance a survey that higher first significantly time going XX% they the customers and signed new

good lots great a marketing retail, team, doing our front. that of So, Kudos on job. to news merchandizing,

Stephen Caputo

distribution your for Any could that up customers levels that, y from just then, you following sort there benefits a they helpful? is or And Okay. be are challenge would that seeing maybe ecommerce color are on from them? hearing of similar of you provide

Dennis Eidson

don’t anything you. quantify can I I for have that

our We independent customers to help with them are working towards solutions.

serve. For ecommerce, and surprise to. that not customers very, of we Others customers that shouldn’t probably as that some have the are breadth you you that playing talked I’ve well think we about very the doing

So, I some as there, performing are can’t really well are there, quantify but obviously, there that well. very anything

Stephen Caputo

from then, Okay. me. And last just the one

for things margins be segment bit the sort look a lower in of rest the of environment quite in of we it a back sort that elevated. we level But could the the at volatile few we’ve past and assuming the Distribution a at guidance little change, and but, seen stands sort the As in it’s half, little as sort of now not as are the obviously, environment bit the in could months. of remains Retail, year, better

implies elevated. and provide right think any of that those slightly there? Is to sort bit lower of net of the I the guidance stay overall, the can a EBITDA that sort detail margins you trends of you rest the to about sort EBITDA way were assume if think year little

Dennis Eidson

as to it’s a of range Yes, I mean, the as wide question mean, part that’s – we that’s a did. tough reason answer. of such gave I we

have referenced think expect some benefits in couple is second those the – continue to we and said, of half. benefits fairness say negatively associates there that’s that don’t than Distribution, Retail. more is will and we’ve of that of that, I north a Food the to had - more Retail the I business based that I I associates on health would number headwind be our know of we probably north we a are company, what in because insurance what of to within well just And think what, in and of the impact going XX,XXX probably some you expect

of by And in way it’s of to so, fair more margins. it some it, gross the think that’s expenses but a probably the of is virtue than likely

Stephen Caputo

you Thank Okay. very much.

Dennis Eidson

You are welcome.

Operator

Grady comes Jefferies. ahead. question from go The next of Corey Please

Corey Grady

trend quarter? beginning And how bill Hi. how end from the about half? Thanks ask the did that question. rates. trend How And then, rates the you impact I that expect do to dynamic my promotions? from wanted the taking to vendors in second of do to bill for

Mark Shamber

Yes.

still level, are products and cleaning or that that other various have the component it the certainly the I general start hard to more you couldn’t demand was like of that mean, can’t think within toilet the I I you don’t I only that you the promotion some quarter, – of category-specific impacted couldn’t what start during the of a items specific think, at that the CPG start quarter. at look, promote very quarter. to as are fact can’t mix the strong we to of think try at that let So, as the don’t second answer, But for speaking was get more to get are perhaps it paper, think, I some get Items second get rates in the items the end the you fill seeing hues I the shelves. those for me that. the improved than mean, of that certainly return still cover But speaking difficult. are you it.

that I’ll that we not on we continue really fill the to But know how run able promotions, so or secure the it less. about we don’t Corey? answer maybe the let where ad the competitors promotional I paper being sorry, maybe to digital the regard. strictly question rates the to levels view fill continue Was half. promote, promotion. or a And other went are I than Dennis seeing half rates, for it we again, rate drove second far of second promote in products number the and fill So, to our am

Corey Grady

would I but that if both, on view great. you be guess, a promotions, have

Dennis Eidson

footing. because to comments but to So, back stores the back we fill rate, It’s going not it’s store, chain is challenged I everywhere. supply with industry. walk not a looked add when But just on are Mark’s running right? - cleaner the some I good, disinfectants, its normal spots the would just fairly not are for There

And sometimes to got on the X,XXX temporarily lumpy the So, by the and allocations are we’ve challenging, or have right? location either SKUs and supply chain change. fill discontinued they manufacturers so, that from that And up manufacturers. rate makes a been

each So, DNA. its each PO – own has P&L almost with

with in of smooth and to the tens system when redo then SKUs, and do running PO a you and it it thousands have it billion We a place. PO business $X very have are difficult very, of is

fill are So, fill get rates think will better. to rates better. We continue

be us they it manufacturers products some where can have will for we Although demand them. signaled are already to giving a that until they satisfy that get have in that XXXX until sometime back we place to

to it going better. think, I get So, forward, continues

the morphing to this, doesn’t is on you that Now, pace, back stuff virus and think mentality, nobody of answer to get rate Promotions, fill on there bets are we it are does, typical challenged that. knows more be if all a other happen. can’t you significant side. in I I lockdown if spike a that hope more the and right. we’ll But tell than a for I sure But will the get, think we the off

cleaners, So, adjusted be But and against the hot with on tissue of lifestyle, a has at eating we what all right? price are cetera, tailoring convenience, cover that part, quick promote we to that and home, think meals, team putting most try course, new et promotional or availability. the left So, consistent the for are of not the portfolio. I the at they’ve we

for everywhere be As significantly at as and Mark at will us. our to just to scrambled pointed fill times was pop think we up, being with rate the balance, toughest behind There in circumstances at was proteins – that the be. able and we beginning I like react they But were out, of it are to. inflationary quarter. the we of Those availability. It risk wanted meat on where episode kind meat

Corey Grady

second I we your of how about helpful. buyback? your to target use I level. And in for plans very about now use That’s leverage are cash. your then, it. for that second Got the guess, of the wanted think my down cash should And half? the question, ask is What around

Dennis Eidson

and has times. volume think that X.X leverage huge team progress the to I initiative and about cash yes, use the additional it since was getting key we’ve there. we working And the in, when capital we So, of a our from as ago, for say, and would done X.X working a a made but came on times been back I remarkable profitability, company down year job

include could think going going on t our and as be P&L. That things I for network forward. bit potentially something might expanding well. question? geographic little important of front, of And leverage I more through like this part that happen see mean, optimizing was efficiencies leverage cash that of and as get could we M&A uses can our I even improving there presence. the our us second is We that thinking a kind then, of think,

Mark Shamber

the buyback. On

so, buyback And a this basis. of the we’ve the some consistent been to – an we’ve dilution general, had in think in offset and I used we’ve annual program on

specific to And any a of I in about But program wouldn’t that. comment still available the we do execute. half our so, repurchase of have fair amount plans last second so

Corey Grady

Got it.

the and And can you know what just do your last and gallon so, rate? if fuel one quarter exit were one I this comps squeeze

Mark Shamber

were say, down? bit we’re much part, I how to I the as rate little on – we down of gallons north XX%. Exit would we mean,

exact mean, distorted a I got I actually during I was the tell rate tell the you the it’s the and quarter fourth, would that I I that improve exit saw course our off probably say say the holidays the the I last little think but we XX. exact of week. bit As started rate, couldn’t But But I be and such. – to the below the the by would it as we that because couldn’t week top, But you know of don’t below so to number. we the it average, can to got quarter. is

Corey Grady

Thank you. Got it.

Mark Shamber

welcome. are You

Operator

question comes go ahead. BTIG. of Saleh Peter The from Please next

Peter Saleh

hoping provide a for was just Thanks consumer the bit start on Thanks. the little could contrast the guys maybe it versus seeing Retail question. the what transactions Retail trends color are relates in guys size, taking as segment? you that basket to segment in more pandemic of Great. today I compare the and and you

Dennis Eidson

transaction for At nearly for the up weeks start XX%. six sales the Yes. that of our pandemic, per was

six same vis-à-vis as negative shopping And consumers was ago. What in were we’ve pretty that taking that continuation mid-single-digits and a trips less basket take to wanting in so and period. sort more is their a our week amazing – year negative of transactions seen transactions of

So, in place. those remain trends

moderating we moved as have Although, they through are the quarter.

Peter Saleh

very Great. Thank much. you

Operator

Cerankosky Chuck comes question ahead. Please Research. next from Northcoast of The go

Charles Cerankosky

morning, Good everyone.

Dennis Eidson

Good morning, Chuck.

Charles Cerankosky

Are the and private-label does tough private-label bottlenecks might for out the which new places good on supply manufacturers? they for Are pretty overall, look talk increase how into the that enter, Mark, when categories there rest And to a well to of are what Food for as there the overall, private-label the and at had to the about get as private-label, year sales can Retail facilities? compared it planning there stores introductions product you are you just side – grocery you into to your product? are get product looking you distribution

Dennis Eidson

some unavailable. categories talk there product has and where we’ve availability. let fortunate are roadblocks been with Yes, run But me become pretty her about some availability, suppliers into have

pressure bit are little disinfectants, cleaners and and them that we under a categories cetera. then like of or et the paper Some of talked intense are orderly obviously with

that there. continues So, be to that

go-forward, am total And then, private we to look say, can as the I private private a fortunate our on being are was improve co-op regard the at off brand maybe own with large a we aggregate I brand we think and our are I purchases pie. piece. that opinion brand, of with able than on the would little as business we I national brands, relationship our supply to to of our bit our with continue percentage TABCO Chuck that think customer, advantage

averages, the our national and reputation is First of of had And we on haven’t having the and the get team in doing exceeding I think historically all, Spartan recent powerful average maybe past. focused that there than a back we been brand that. more can

the and going really I with in think the with our more And near-term who to many is brand that stretched the some to as are happen relationship not value. recent even and going going dunnhumby probably helping the only insights it’s but unemployment private with to that current they private brands And is economy most how they place feel I important are. moving than be past. at did find most seeking think, you forward, consumers look knows us what’s value. are likely great to a in And level,

So brands. to I natural think, there private tailwind is

– XX% said that results, when as we brands and more going thought they quarter, the when we have customers survey And them to quality you said on of we even loyalty – was excellent. survey, plan good in forward. the buying bought and XX% a them our private of customers of do card Our they XX%

that’s think come. that of get work are to it. things on But, I to to we So, hard We got a done. good harbinger

Charles Cerankosky

find brands, is foods used it that at pre-COVID? get private in your they related evolving to is display product as shoppers to how you prepared of been And And product, prepared accessible? that do get the the it because store. see going to to had to and are compared Where buying where what it kind

Dennis Eidson

and you deli quarter, that, areas where were And have domiciled were type is and if they were business the most of and bakery. they the over look years. Yes, buying we only two the quarter talk what whole of recent lot product our HMR that consumers we XX% our are comps, we negative in and about deli at

everybody buyers or that And lost put we of. not the that customer where something and programs areas is those trying like, so, a operational buyers or from advantage were are different think our pick take on. that trying pre-packaged components is salad We’ve to sales together can soup the buyers about are in that omelet working in way your we being to

have we some do I it’s lost are growth of and that think beginning opportunity us we pandemic think, it of the of on we back in there. get here. for I kind So, to to the an that But work

Charles Cerankosky

Thank you.

Operator

a from Instructions] ahead. Mushkin Scott follow-up [Operator we And have Please Capital. go RX from

Scott Mushkin

me. Hey for another question from guys. Thanks taking

other pretty into lot year, Have I also $XXX high. stand this food that topic that one question? go back of I assistance in the way seen the is you still strategic the plays short-term the anything think your my and the are thinking the want there How is rate business? a I kind on the to of how materializes, half to you So, the yet, about is your government of program, unemployment guess the – is talk into

Dennis Eidson

it? Have we What Scott? seen

Mark Shamber

unemployment… The

Scott Mushkin

Have any other you seen consumer have of Yes, assistance words, yet? behavior some to seen Yes, in seen change government anything start have you anything yet? these programs you in off? as roll

Dennis Eidson

We it And much do far and right to think the see currency went food as hard that’s sales more become in in the with be about as stand food in feels our to that tighter, exchange numbers. you usage stand, are important. see, to think that is we’ve we going going can’t moderated I But said our brands, I seen, comment forward consumer that the private likely customer. the about I the we’d and our the quarter. It’s decline through the through but direct quarter sales find correlation

it’s think merchandizing and far on promote I through far not lived and time. through lot like last moved that the and that promote period the team becomes you we are of when that more people here not what And we operated of from important. marketed recession and you or it

very the perspective first a difference confidence. I store put we require shop early that, also fact market safe have not a is, glass concern are more I think our really is safety, is little in the virus the there on the this flexi where up and you bit very feeling sure pandemic. did making early – into to there were got the think think, masks things I a right? in wanting and from And So, own major to we We some time this your about not a

got on that Our company about where the best-in-class And on this think matter can to customers, is really the feel relationship confident and value that independent that we’ve where think and store, a if is relationships our for what the even business earned and consumers are on matter. vision think, relationships do I right you today we pandemic kind more local think and we’ve executed be that to piece – of we is retail middle and the in. for now with And company the think a that. looking we our our feels feeling I I as local comfortable they through statement bit deliver retail I operate of

Scott Mushkin

Thanks. Alright.

Operator

like This and back concludes answer turn Dennis to the our remarks. over closing session. conference Eidson I question would any to for

Dennis Eidson

our with you to to performance participation thank the Thank the I on speaking we and to the great second today safe. look in quarter a appreciated future and again everybody opportunity you. certainly everybody, day forward and for want and call your we stay you have on update

Operator

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

disconnect. You now may

SpartanNash (SPTN) 13 Aug 202020 Q2 Earnings call transcript