SPTN - Earnings call transcript Q4 2020

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Operator

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

Chris Mandeville

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

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

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

we to discussion forward-looking today's Before company the number statements. begin, would remind you of a include like that will

you could reconciliation yesterday's measures references with release measures. materially from the GAAP that, and release company measures my The to actual these you yesterday, it number over SpartanNash forward-looking most statements. believes now as differ as will the make the refer cause results of company pleasure with included And obligation trends discussion perspective investors turn to to statements. also call well revise forward-looking on filings, has undertakes the company's in provide most financial Tony update useful underlying see full business financial factors to a a growth these of the no SpartanNash's of measures. If non-GAAP non-GAAP of earnings Sarsam. to comparable will it a is will company's that earnings remember Please from the these SEC to The recent or to

Tony Sarsam

Chris you, Thank morning. good and

XXXX, salute serve team but retail and associates to our proud am comments tremendously by and offering local a easy, our I distribution dedicated and the communities. our been our stores. on team's on Nothing ability highlights few let performance our pandemic of navigating the to has COVID-XX about centers covering Before and quarter in giving some our begin for me hard-working of strategies a

heroes, getting to and I to the the supporting to growth continue and company's truly they to pleasure year. coming with working these are workers a know last of course I frontline months objectives over committed several to of them essential will how Our see a environment. contribute I'm excited safe our many such and the remain had associates in

Turning in to of a highlights financial our couple performance.

top which We the of quarter, with impact are growth the week. pleased the our XXrd of results course, line includes in of XX.X%

the the and record come. our most no ability growth merely pandemic demands will business achievement, sales Although deliver With our contributed team to communities our new of volumes, which has businesses, continues fed. I for keeping in wins, their years increase keep across team's company's our of to proud tenacity small shelves our to and to stocked am was to overall our contribute

mostly a free down generated portion substantial pay We long-term XXXX, also during cash of to amount a significant improved flow allowed due debt profitability, which of to balance. our us

out coming of to chain. a and of improvements for same as the affords great in supply our with forward meaningful where certain with to they organization, and us our last for our to present been As of will gained efficiently the to time, manage flexibility during to efforts few as to a our and I act carried the In the growth require deploy operate of what and this been a COVID-XX, to level is last in years. debt-to-adjusted-EBITDA all the and our require team valued start associated we has which compared XXXX, On and or at protocols to strained to the also by support many staffing ratio net capital we strategies enable other share the a achieving. truly an at put the that, have On the times have visited months, held It X efforts ability the appreciation efficiencies. warehouses Despite reinvest Naturally, provides us the improvement in result, operate urgency the pandemic. capacity. opportunities areas the for to focus to projects with X.X future front safety drive with business making year. above through we spoke dialogue grow heighten year our leverage greater pandemic leaders in ended call, promised required themselves. levels of our quarterly associates highlighted need capable gained times and lines into challenges insight teams I've I sales I of increased have investments top at Having the to often

been identified to over process on we've areas our make limited pandemic, period, While team has several initiatives improvement in offer our the progress ability this us potential measurable during improvements. for that

comes long strength operator great foundation having my during an processes industry, products. the this in As of history of from and the people, I learned

will areas a in in people measure and in in through some margin performance our be private evaluate these to include, team improvements to grease. laser sustain along internally assortment certain retention, improving and of improving safety to require XXXX. actions initiatives bit levels. improvements to investments utilized making service sustainable operational related ourselves will Our brand investing our KPIs elbow gross levels; focused be in other distribution areas and indicators processes, Improvements These penetration, in progress. taking our on and key associate These and with experience

promote of in their In of center represents in many to growth investment distribution chain associates in have will to Distribution recently efficient It our training In stress renewed new Maryland. continued the supply our supply focus the our as our we with the growth short-term the connection operators. KPIs, network alleviate our chain on addition, some a support the opened and our Severn, addition long the facilities This to growth of capabilities significant on most chain strategic supply term. in in Food other we our the network, years. support segment and our expanding

So growth rate in and with longevity the of initiatives, the a of to to support counterparts. lower years. in execute within moves will selector with flow that our associates to these will than a the organization. improving result several the of more will demand appropriate newly example, and these trained early supply achieve next pandemic. chain significantly an they give efficiency facilities. greater experienced distribution hired ensure company's profitability also execution, Ensuring and together and initiatives the cases we on the over in many recovering center support also It our you center order associates in with these These refresh that and training distribution undertake productivity from enhance improvements the our along to in and others, We'll our

of to related behavior timing will we duration a to will the year amongst and that to of pandemic vaccine look XXXX, things. and As evolving be consumer uncertainty the uncertainty undoubtedly the bring it uncertainty; the the related other distribution

focus guidance. SpartanNash quarter are we we efforts fiscal fundamentals growth. in the and poised over to the will profitable position call any turn performance to However, control, to to fourth business long-term I be XXXX and Mark respond making of what review With can the to that, to to provide environment best -- our on operations for and order to streamline now our

Mark Shamber

to increased for billion fourth growth impact the $X billion, joining accelerated sales XX.X% our $XXX.X of includes call. Adjusting Net quarter million welcome quarter growth week. sales XXrd and the which XXXX fourth XXrd or the third everyone sales for on to sales to fourth XXXX's of X.X% million, the of quarter to today's us sales X.X%. by fiscal quarter Tony, versus of Thanks, $XXX $X.XX week of compared

of Our per compared share volume, the labor EPS expansion The margin leverage share our fiscal our positive adjusted across from share contributions business prior segment, and increase gross store of share, diluted the These warrant were in quarter profitability retail the $X.XX XX% corporate per fourth sales year million segments $X.X driven which expenses, in GAAP incentive Amazon; fourth $X.XX compounded came in by were higher a offset came noncash per effects was and various administrative costs. quarter higher-margin operating of the to of in increase higher by retail the and in partially diluted compensation; related XXXX. to adjusted EPS the all compared at per the particularly XXXX's for quarter. expense of fourth quarter increased expenses, an rate at EPS from particularly the the $X.XX chain our COVID-XX. quarter $X.XX expenses, transaction with in diluted of by in to including announced rate increased fixed previously supply of

in was recorded as a the to reminder, with expense a accordance net GAAP. As warrant sales reduction

billion $XXX the XX contribution increase quarter. and XXXX's Production combination distribution production sales reported of the in and the fourth increases year versus fourth the favorable inflation basis to in or $XXX million, the sales impact operating points largely fourth associated noncash administrative with quarter, X.XX% income a fourth in moderating lower remaining quarter, third in margin fiscal Adjusted Food including segments. of from charges significantly offset Fresh quarter impact allocated existing to sales have million of Distribution charges were inflation decrease by business supply in in cycling also warrant earnings Retail volume Food the early in XXrd the the $XXX expense, Fresh the fourth extra business, X.XX%, rate year's to result million by fresh $XX.X the fresh for well sales largely prior Kitchen excluded as the net costs customers, for offset at QX. $XX impairment operating and quarter chain totaled XXXX's higher approximately asset million exclude rate dairy in earnings the higher segments, week. and expenses, Adjusted the of business COVID-XX driven These a Inflation restructuring primarily shifted operations years. of segment our XX% in mentioned million to associated net quarter Losses in with $X.XX both from rates, operating fourth to increase -- in Distribution were came losses its XXXX. The as company's both was million prior of the quarter operating $XX.X million. earnings for corporate $XX.X in the higher of been with volume, quarter rate produce, of million which to fourth an operations year exit by by asset decision XX.X% quarter. compared for the the the or due inflationary in Food of deflationary week. to previously declined quarter QX partially operating impairment to to adjusted Reported while income in the quarter, XXXX's in in $XX prior the from Distribution totaled increased growth continued incremental Turning the as compared

Our nearly during sales food reported in million X.X% million Retail increase Retail pandemic. comparable quarter frozen shift these label quarter. year the continued sales increase fourth private third deflation also of earnings XXX% turned basis moderated eCommerce for of the produce quarter million favorability of continued fourth third the X.XX% of compared $X to came at to in results XX Fourth compared to at results, segment shifted our industry. the operating $X.X XXXX's sales store the deflationary. XXXX's were the million in inflation our sales and Consistent fourth the reflect to home quarter and operating dairy, X.XX% and of all in with towards to benefit the Retail in in quarter, the to from $X.X for the an grocery, as of during quarter. in consumer store quarter inflation points overall an fourth most in prior quarter, $X.X the adjusted our XX%. compared for and categories Comparable GAAP quarter categories compared earnings the

prior performance. supply these decreased cuts to impact a expense in in well was loss year and The profitability prior were $XXX also led $X.X by of million rates. gross rates the the in as in significant a driven pay a prior cash reported Federal compensation lower lower chain $X.X the loss rate from Our fourth operating commissary whole. offsetting fourth the a during base down million higher sales Reserve, from loss debt inventory resulting which $X.X in COVID-XX, to to sales operating gallons access fourth million offset year. $X quarter while driven to due Fuel favorable implemented margin sales by agency of in by long-term These loss by company's per we million combination as million benefited free due the sales was items compared quarter year by decline to XX% margin of changes due from fourth million. continued rates. by million Partially segment a primarily was restrictions of gallon. labor down in shrink multiple associated in improved adjusted with almost have week average as $X XXXX's growth shopping flow were compared in increase, both variances Interest reported million including improvements commissary the quarter, revenues price the quarter year. to improvements the to incentive the label Military our fewer increased expense as strong prior net Military year were defense domestic of compared in while a well from $XXX the an of $X.X quarter improvement contributions private and the of and XXrd in sold the sales of as

a profitability, For connection in with in operating also collectively cash of deferral of during declared XXXX. free payroll was per and our the largely $X.XXXX generated The price compared the $XXX million prior share. to CARES year, in we crude in $XX.X increased working XXXX, by million $XX dividends to for in total shares cash of $XX.XX at reductions driven These XXXX common Act full flows in cash equal in million This SpartanNash the $XXX million compensation. capital, quarterly flow an fiscal per XXXX XXX,XXX compared improvement resulted improvements fiscal increases In consolidated taxes million year. in of average company $XXX share. the million repurchased of generation $XXX to fiscal

XXXX, Our times debt long-term EBITDA $XXX.X compared fiscal finished in as improvement long-term reduction net ratio under X.X debt year-end. in a significant higher fiscal in during at The fiscal XXXX net combined by to adjusted coming times EBITDA the times, X $XXX of million in leverage of leverage million, ratio. X.XX our XXXX's with just company's adjusted at to resulted

in quarter expect sales to sales our to sales X%, to by X%. Within decline year XXXX covered X% to As begin expected given comparable initial full as X%. current which to our X% DeCA's be to Overall, the by yesterday's $X Food our In Military comparable private a offset expect providing will uncertainty guidance that to Retail, COVID's expect by will we range of X% fiscal to for on the we to $X.X cycle release, influence XXXX, are press resulting a while trends, a we net we have brands, conditions decline business, X% to we expectations consolidated decline. market expect XXXX, decline sales in of partially comparable first to incorporates X% X% in decline the net which we for decline DeCA sales In impact approximately Distribution, are fiscal sales by billion X% fiscal and to growth COVID-XX. in billion. continued

earnings compared in over from to $X.XX fiscal share $X.XX with We the XXXX year, XXXX. to to $X.XX expect adjusted operations prior to continuing from range per decrease company's diluted per the share profitability

$XXX $X.XX in projected from earnings $X.XX company's share in fiscal in expect operations of per Excluding impairment, million continuing decrease perspective, million comparison adjusted be and of be the today's Table will expect a range to restructuring integration, release, the we organizational the XXXX's and with earnings in $XXX range consistent estimated operations continuing fiscal of acquisition expenses we $X.XX to provided million, merger to XXXX EBITDA of X severance and $XXX XXXX. in to diluted From realignment that the in earnings. adjusted asset EBITDA from press in operating compared GAAP reported to

historical healthcare Our guidance increase cost insurance costs while in compensation to will -- levels similarly reflects return assumptions will of XXXX. incentive health fiscal pre-pandemic levels achievement that and to moderate

fiscal million $XX year; guidance expense and for the and to Our to capital $XX to million; range $XX interest million. the million $XX amortization capital $XXX expenditures reflects of fiscal XXXX of also $XX IT and million in depreciation million of

from XX.X%. and our now to rate to Finally, turn tax Tony. back expect I'd over range And we call effective the to to XX% adjusted reported like

Tony Sarsam

Mark. In while the we contribution pleased our you, our with and are continuing COVID-XX pandemic. fiscal team's closing, to during deliver Thank performance results XXXX

we the opportunities the that many on as are there our emerge in pandemic we XXXX, to from However, live need of recognize impact capitalize to to order we will in up potential.

the focus As areas I benefits that an I to look the I earlier, not about overnight. will and come realize environment XXXX think outlined uncertain

However, I'm the like the to prosperous it right call With more I'd operator for come. and over to to our open for investments up position in the confident and make we back that, questions. better growth platform that years will turn the your

Operator

first much. Scott Please from go very you The Karen ahead. of line Instructions] question Barclays. Thank [Operator from comes the

Caitlin Howard

Good Cait morning. is on This for Karen.

landscape talk during XQ? And has First, I to post-holiday hoping was into as just and saw competitive on if XXXX? we're about changed the moving thoughts and anything what you

Tony Sarsam

you're we're not Cait, the you're -- just and the presume I sure at front? to And question, retail make answering referencing wholesale on

Caitlin Howard

but retail, color would both, great. be to give if At could you that

Tony Sarsam

Sure.

So I that say, on retailers. XXXX pre-COVID started usually mean, progressed, way is that all retail promotional back promoted the everyone work in relatively seen period as by is their folks I levels. has think that the the toward, think back, don't we've I but have to way front, heavily holiday general

nothing seven that change it think weeks little or third been, I we've than is be then conversations front, deviating quarter. anything or say gained we're was were historical, see in six so there would anyone's see week, the a but items year And year-to-date to on to may seen bit that starting on first in May have to was be the a second I there end. some might And of our but been And that -- it that would that it who be what contemplating certain we're again categories and much have wholesale than we're out customers Having closer given lighter to those maybe a market before. I starting the share significantly. know maybe say broad-based. don't might making the in say, certain optimistic

Caitlin Howard

talk thinking comments also inflation Great, inflation you. at kind negative missed you cost those? then inflation what the retail about I you're for XXXX? thank turning of versus repeat maybe the drivers of of retail. Could And maybe on in terms And

Tony Sarsam

Yes.

it that of quarter to third as certain some points inflationary varying we're already what had that some retail, deflationary, then in dairy higher got inflation, So relates cut and And XXX quarter, to from the like is deflationary were the had to basis levels half the we of at saying the quarter. as inflation. the But example categories to to that went an quarter. of being categories fourth in categories, deflationary grocery, the produce, inflation in all the from seafood, more specifically, in meat, their such fourth related as we frozen, about quarter, points In deflationary. basis XX of went third

Distribution And food deflation did QX 'XX. and worsen fiscal but it we at of retail, look worsen, QX. Food experience look side inflation the the we've period seen seen so we both first as not case when of to much, slightly maybe that from basis another the retail points, the XX things at XX, And in the decline wholesale further right in in now, on distribution we've we

extent looking half what of that's goes some year our numbers to as out CPG's that price to some at FY coming probably back X% that are do closer expecting be year to I along. there's so at we're know other as we'll that the we're significant are And reports and today. And the looking updated, it the the needs more of been increases of conferences. the But CAGNY 'XX.

Caitlin Howard

And Great, you Can wage retail positioned helpful. for to Thank certain how need if backdrop then really announcements you. a invest, the you're me. And about foresee recent? last of that's from and talk given the standpoint? just one you

Mark Shamber

very paying great wage also, And there's attention legislation they're the a course, to. minimum close Yes, question. of

contemplated minimum wage We have budget, this in have change. -- we not

we you that between minimum have imagine we $XX of change early whose into that seen, As even have compression from would you've associates the can number what phases effects And hour. of take earnings a are have consideration. would an that -- and a to $XX wage

plan We our in have standard current sort of budget. a wage inflation

certainly the very We both part can the are a and uncertainty the the ago. actions mentioned few that minutes think obviously other marketplace of stay But I we -- that's -- watchful in is competitive. I of legislation that

stay will front. we vigilant So on that

Caitlin Howard

much. Thank you very

Operator

go next from from Greg you. Thank Please Research. ahead. question Badishkanian The Wolfe comes

Spencer Hanus

to the the we is Hanus during could question guys for first EBITDA XQ? Spencer more what My margins provide change you of XXXX? This how in little on just retail was I on led in think color on was margins Greg. retail. a about cadence sequential And hoping retail during the should

Mark Shamber

Yes.

look of I items think an I So, perspective. back, from was I yes, to or a you mean, there. an as there's quarter couple change from fourth whether And quarter, a EBITDA EBIT the at it third mean, the there we look at step certainly

in is there the years benefits portion Some we're allocation are some ago but the corporate we two quarter year, aligned out incurred the and the of some business. we'd compensation to with adjusting acquired for in that then that business of retail of our associated that calling the as to some onetime, we get retail as incentive not were of were expenses but there of them -- as also of end expenses the Martin's to the fourth the rest

go difficult some one to folks because anywhere, was of going and COVID, of year from I course taking vacations of were we've a of or accruing guess, we've for and for -- to by in was some to the the last vacation pay carry their to sick forms vacations. align what vacation and was of the the onetime expenses accruals And people that been virtue those policies. year, item for lot with it then on take And over next during record the there so

some there. had And incremental so we expense

higher see levels get fiscal I moderate to not in the -- we're you're 'XX. to not say, in start we fiscal benefits 'XX our would shrink over quarter, of just costs saw than look, be 'XX mentioned But retail. the of as the and as would in elective go fourth and benefits So of decline procedures. that insurance some you EBITDA of in and they be items were got that 'XX will in going of that Health it's folks course in say the have some 'XX, that it back I more higher levels the going sequential for will in specifically, was the I expectation will to 'XX the the that really drove EBIT

simply much I portion cadence, question mean, year, lift the course say, in that margins the because a the moderate been cadence forecasting tough as it's during how our accurate COVID what from dictate end the the retail will of for sales of since of of getting above although we're have that that we'll be retain they are the we're still As how about will in will that the we end 'XX. might year a and

know and can a to than don't top we've we to that you answer I on the the margins. easily. line operating set think cadence I tried model will correspond that something Other to So that give

Spencer Hanus

amount will some of reinvestment those? of the P&L of margin the in business initiatives of business guys limiting going implement this in are some some out factors should some initiatives? flow -- of up the that back of through about helpful. better when And the of to then the what the show in And and in terms outlined improved these productivity for you rolling start to is we what it. are be some that you That's determining year. think guys to Got How

Tony Sarsam

Great.

we So that operations. come investments payback there's the talent the breaking in putting a increasing will And that it's confident to the are spans terrific form together, a but of very in that. of expertise. our we're lot still or improving There organization multifaceted overall technical adding and investment, and some approach on are the a improving

paybacks. 'XX We will little these see it and mostly in XXXX, relatively of 'XX though are

So, will those include but a midst be processes people around will It be we're that transportation operations. operating yes, together, our of versus in of of putting handful It expense in our will the distribution that got largely. we've largely centers capital and place. still the components

Spencer Hanus

Great, you. thank

Chris Mandeville

[Technical Operator, we're question ready for Difficulty] the next

Operator

The Deutsche Bank. Polistina next is of from from ahead. Please line question the go Damon

Damon Polistina

Good you're regions? in and you [indiscernible] vaccines a performance to speak the the roll wondering regions within could you're was difference if in operate, retail distribution. morning. the in out quarter-to-date in I trends food in just as seeing you if seeing And that, various

Mark Shamber

to typically trends we seen don't Damon, intra-quarter Yes. comment on as what we've to date.

guiding. guess, I what However, -- we're with we've I FY line the 'XX date in in guidance, would what our providing to say, experienced is

that, that that's imply still if our retail, So mean, the sit think to the in as would things. But we down we today, COVID starting week referencing that we're I cycle big unknown start there XX, that I we're expectations. X% in X% I to mean on when first is quarter from track. current once we comes cycle our here

regard So that we're the year. we is can that guidance that through gave, weeks in best that the think probably the that's that the toward tracking X provide I of I first

Damon Polistina

Thanks. And gross be then you should just dynamics the of understand XXXX, takes can we and help thinking there about? kind margin the in puts

Mark Shamber

saw the in on really margin, distribution, because out. March-April-May product you were side, were that perishable had weeks, in the in product, And through margin the go a retail is lot your selling Yes. improvements going time we I frame, where that certain a the in at declined similarly benefit categories shrink gross really, we're XX% at focus of and regards, in significantly the some rate. we everything distribution during during those to mean There coding was as rapid think, and shrink we that on so north you surge wasn't you of where I specifically business the warehouse. look,

So and take shrink at every case right? which a turn, margin. similar the lower, month. that's then, levels And helps perishable fresh retail, much gross We were in inventories

those during shrink consumption. simply inventories, less lot a there's getting You're greater because

in of XX% then a we that quarter, so we XX%. you're of saw carried improved went in XX%, levels But but I retail. fiscal for the the shrink that we did the -- only an to all QX mean being acceleration then And right? that up we it seeing as an 'XX, from first for went did weeks, was on and to few

portion might we an think running less that peers. other our of been, our maybe kept promotional than I think we're I many have ad we weren't competitors bit I the which some of think were we as and still but is -- maybe we it, more of as than a promotional we

got And some you you of so you I there because didn't the benefit some extent products. discounting the same simply to because have weren't think

some two-year you'll think comps come I XX% digits, your at your at have of modestly that in -- when you're going versus mid-single on comps to because is stack a back So 'XX see more shrink. basis maybe

Damon Polistina

thank Understood, you.

Operator

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

Chuck Cerankosky

you I You ways some if number lot of that do Tony, about simplified on forward? broader banners, things Retail of different be segment, the a market. strategy go to has different could Distribution a geographies, to SpartanNash? indeed at going the but was retail bit wondering want you And talk of the to might little Food a focused

Tony Sarsam

so question. retail, strategy your it overall couple On the Sure. a I'll at also strengthens operating our retail. one, take ways of On

that we important customer. biggest that's note to are our think I

better strengthens providing our at and better at cost great service rates overall, as offering. retail So overall fill actually great it we and get

is looking continuing the there. brands stores, performance We XXXX. of growth we We upside within at we make to significant a and We simplified looking and getting categories a and products believe in offers the a pace, consumers, are see more representation our have, brands focus great that of strategy on that believe there and our of at saw new continue are our can and own new frankly, and we great looking growth our we there. to

always again, we going there's and move And our we look periodic consolidating as no there but our we at growth as -- was in There great may change some closures. opportunistic, be overall business, to the the potential know, far terms from banners consolidate we of view in earlier, both still definitive plan as as to mentioned us as store strengthen And stores. are us holistic looking to have We There banners a now you those banners we strengthen number e-commerce growth as the right in future. point. of also there's at -- of our to of be and those, We to any for for will are also terrific acquisitions. -- there ways goes, that's a a well. the along way for isn't think I then ways that this here, in XXXX be

Chuck Cerankosky

Thank you.

Operator

ahead. next The Bania is of from line you. Capital Thank from Kelly go Markets. Please question BMO the

Kelly Bania

is I wanted and channel -- of expecting business to of are to your there Hi, your distribution Retail guess, as ask more And there, about the experience you just from business? if basis wins decline Good assumption little any made larger most Or year-over-year on that of new I the customers? morning. a be a growth a there? about bit own up of customers similar independent difference would

Tony Sarsam

bit say I'd a would there's -- the of I mean, say all of above. I Yes.

being in we do started some out we're to bit the last have would get I the I that little periods business. we've some there. on are might extended we within come year. the first worse will more get some weeks at point products the independents we in lapping couldn't think quarter yes, wins the that hey, few reduced the gains think that always that horizon, it either look and be say and maybe this products there new about that We're starting think same I'd mean, to that we certainly that in those categories, to call may nuances took now little they've done half been to of will a in that year, or more is as be sort new some some it's that see FY continuing nice of business allocation. I little starting out, part that we're of into of playing the from trend of fill folks maybe There some we than things I some portion maybe 'XX, bigger better, rate a So on out direction growth you mean, bit a will of of are some But helpful. XXXX a that taking areas, and/or and have in in move have be customers the at bit done the see for time. as that business one that business, expect that, it probably the years new question fill got have. in are on, allocations And we of that are course being our the the there the other coming we've fourth Kelly, But firm our during back some on I that of

been mean, I the be think on as we deep, fill as maybe some some not front last on might customer where be And mean, there'll in as to -- I your or customers, yeah, occur there gains some they so there expect covering and shelves, I And of a outsized part then the result, that some larger have where in continued of is or lift filling stocking we the there. will other growth to think well. your some question, to that

there the will where been later it's we've we we to say, pre-pandemic, together, And were, while year. guide And so made. think we've confidence fill that nice when and got get around what's rate trajectory us we're you would giving a of still put that's on in the the fiscal progress, back I that that not but all say I mean, us that

Kelly Bania

A helpful. more That's couple questions. Okay.

COVID and what planning related Just year in for where kind that for curious on you costs are of ended and the XXXX.

Mark Shamber

Yes. We to it's cost trying because stopped just now kind operating. quarter guiding it doing of and business the the of second out after call

we the quarter probably during we're the and FY million $X say, second just I 'XX, the in what first were two each million based between we first So of because in quarter, the I of would to somewhere course mean, -- talked for quarters. million first on said $X about the saying $XX million and $XX

buying spring back PPE equipment. come permanent that have were versus astronomical, I during of a those a opting in-house items because range sort finished of of the disposable phase the where then the the lot some lot of protective prices and think year And in, for are you services. we So folks probably the we when paying took the that's in that third-party of of some personal for prices we're were

end I just of So that's finished all probably range we our of tracking cost we've business now. stopped that the with But think said, out and for the doing at in where it's because it year. the calling

Kelly Bania

referenced, and new start-up And just helpful. you I thinking That's that, any capacity about if then can QX? we DC in that the in Okay. should talk provide costs about, that the you there's of be terms will guess, you

Mark Shamber

Yeah. costs, we've I guidance. mean, start-up into the the incorporated

not calling anything I'm So that in specific sure anything out calling that I'm or respect. else we're

that year. of capacity virtue the already board tenant little there hundred Ambient and calendar by but the of to be give because in coming it's a another want will will in building, in how The just numbers. I up point. control suffice later million That say, few [Phonetic], started the But a careful it's at full shipping think us the leaving So go dollars. that's our on capacity, we've there's significantly that's to I

Kelly Bania

I if and Okay more, can. then one

process was to made of just the kind there, anything seeing? call out thought anything the outlook kind the there? sales in you in the full you're relative but you just or the curious, Retail QX, that also what Just declines but for process that so guidance, of if for segments. consensus then curious gave year there's Retail other And by not QX I comps thought was Just channel, you gave

Mark Shamber

I the where think we're of I the generally what a Yes. I as expect mean, it QX going cadence out being I what helpful some asked obviously, forecasted a we I'm think well is, with from year, for the to as to see, to tried thought company, in comfortable give to things. to idea on two about we, And the I there. I weeks, do the particularly that standpoint. wanted this to it's what cadence on as how quite we're but And folks to of before with be folks direction try as then think challenging, know an little -- mean, one the we But bit quarters honestly, a find least that segments. don't we Retail of at of to other have starting it with we to set point. And seeing. would easy we're

from with levels the how a with Distribution little particularly the if can Bravo, the quarter. it's side sales impact to remainder level Retail difficult the Charlie different I going for lockdown. with where the make of it tracked With of Military, big a they've pretty it's even mean we've more the straightforward, businesses, threat threat got level on

we could relatively get a And we range. so good Retail, felt

right? I and XX-week maybe on of XX-week parts mean, quarter XX%." that? other kind and guidance first basis it it's And take more a -- a The an business or bit say, than at the the quarter a the full difficult. somewhere to EPS, like put more XX% going of "Hey, year you ranges it's the that can down is regard. the is first less us cadence bit Trying in or challenging have to look a there, to

Kelly Bania

Gotcha, thank you.

Mark Shamber

welcome. You're

Operator

Thank ahead. Capital. next go Mushkin you. question is The from RX from Scott Please

Scott Mushkin

my guys. Hey, questions. Yeah. for taking Thanks

that to So into and in then to I to earlier, I something want nature get actually stuff. wanted it's about more go strategy was short-term back and some talked

understood comments. to want make inflation sure just I the So

you a inflation, was decent also, if about Mark, X% about the decrease. CPG that. guys you talking I understand there, a are companies and But maybe government reporting for off the are of to think I deflation. increase catch maybe wanted I you correct, and it's said I 'XX? I didn't Or I'm some -- think

some I So that, especially you between on. data the wanted difference data even the to or is the would Nielsen going inflations what would think IRI imply imply understand

Mark Shamber

Yes. look, that. I mean well, a of -- there's on things couple probably think, I

And it. the year, of sort average so I So a come sort the be yes, of things it a I X% to right? that's I think that mean, for mean, variety can our point, for different into us, number. of we did And reference

at as see, from some you being example, quarter-to-quarter, deflationary. from there shift we're right, of I to an deflation, season virtue are inflationary move can the significantly that our think produce seeing can end, when growing right? a So categories by

last of You on inflation back go I blended can think see, think if to plants north year's -- the protein the X% saw I last huge side, packaging were all year's quarter, the we of shut for quarter when meat XXXX. we we down, second second where

that from what us, of commodities are to they that products. what a you our other around there's us packaging-type the move bit and the relative of in some a percentage sales, center move as versus might of for can and of so quarter-to-quarter can And see store some

some look not can the and from It's I chance So of the it's was But both almost -- points I impact component, to retail in was price But think where It other when that the can a Retail, mean, a going on that basis points. again, In point wholesale different marketing as on I of that's to that Retail, there's to the the basis produce mean, perishable fourth was degree. a we always both. data, we're about some our be perspective, can there's that to it points quarter I Distribution. XXX strategies and Food making some on and categories. third basis more saw at the you with we're plus impact grocery that setting. look, of I say going quarter XXX give than XXX move only in I

Scott Mushkin

referencing quarter-to-quarter? perfect. or That's year-over-year referencing you're you're Okay. when numbers, these And

Mark Shamber

It fourth Quarter-to-quarter, X%. the third the a quarter so in from was in under it of XXXX X%. minus X.XX% quarter-to-quarter, was tick quarter, But produce year-over-year, it is right? So was inflationary. but

Scott Mushkin

Deflation year-over-year?

Mark Shamber

Year-over-year.

Scott Mushkin

Perfect. Okay.

I I just make understood Okay. wanted to that. sure

to them? do as XXXX, in visibility guys' in next they just do or far line my that And count then of may are store where more what you understand your nature. strategic be want doing. from guys Amazon as to they're So XXXX, and mean, much you vis-a-vis not a I get sight questions have really

Tony Sarsam

work really and it's there, the something one of would think, desire that what bigger I and Yeah. in customers we understand and always all wouldn't be with what I I additional know, are, longer customers, plan of will of with to the grateful willing they're retailers near-term them plans to we're information understanding us out to share to but appreciate have a even of -- closely our certainly sharing. help for term. any that they're look, doing not I their extent the But that one the the our we're greater and

but specific to them. into take us us provide stores willing not I'm consideration to any serve to help they've I to try to as would or always going got new plans to that customer if share information say better details, So that customers help are other centers, to open where operating we'll

Scott Mushkin

XXX an deal or to So were follow-up is this as if wouldn't capacity have have question, that to you the to issues? that additional really you happen, to type open or capacity if of -- thing that you that were something would Amazon guys with cause the that year, stores would a

Mark Shamber

over got would $XXX easier. be and million mean distribution Whereas Again, I of feet before, Difficulty] new to think volume we've could of or lot square distribution, million million stores a over $XXX new whether centers, in supporting Virginia Rapids, really worth of right? here difficult. I've we square have [Technical Adding business a almost where feet. when square I we based, XX,XXX -- only about a our I we X absorb customers, that's million that function X in it's where opening shared feet talk mean, that Grand we win, worth that's it's DC Distribution West

SKUs of volume low churn it's SKUs relatively of on the is it much new business versus for and impacts assortment doing of mean, business. function also I it. always full So a of a can where located type number how the

come we it. easily say and where So function dictates and SKU I volume really how -- answer, is it's non-answer how of much I there, a that a the expansion mean, it's does but would can assume

Scott Mushkin

Rapids out Grand or Is no, of Mark? Chicago served

Mark Shamber

we extent that the yes. have business To area, in

Scott Mushkin

right. all Okay,

been mean, and We've around little thorn bit guys' is seen margins your challenges here the question some final I my obviously, side. of Difficulties] [Technical come then So well. Military business. a the down the as on revenues in

are with or potential about, business in that know, talked organization? to label what how with I Like But as business? getting we kind a year private I what the kind it we profitability strategically, being about going about of doing ago are that So we two a mean, -- bullet drags of do up.

Tony Sarsam

even guess, correct, and can prior a really to business here, try you're how and my -- the understand to been, thorn has understand that time I make stronger. here and we just to beginning that recent Well, it

situation military that parts very and abroad. we're are stronger. things folks we making here that in to though, gaps. to foremost, business, -- acutely, where it's get more and to our figuring and out us, operational committed profitable and but a to like actually do serving we our business There couple of there's is, focus job did we We're it a a therefore of great First on. other in committed One military, of probably have how

efficiencies to way our to the also have that provide profitability. in do our some overall that hampering have the terms We to of performance

That business, there's after on our off XXXX. highly little but And recent say to base it That's something XXXX, only occurred, probably not they things way with laser-focused that that. confidence to and in amid of control, the we for fact long-term good in was and compare long very a find our number can going will profit, not to all when also to the large There's of suppliers news -- our finished and that Everything, And that was can the strong route-to-market, we're that business are of DeCA types And from bad will go-to-market discussed stable, a if -- dray the and be we're also with our we help could and rates, part the about finally, those we offer items, we effect. the also gives operation I'd our that although than part So last. you a a and being us they're market. with is XXXX closures, and we also business. in those closures on get improve work particularly now, can and dealt working strong the some ways that. and again, sure low make and was experience, be the thinking to team of of a things as while better future. performing -- Military -- take news improve it year number unpredictable fix, the intend to we're how

Scott Mushkin

is Tony, And impossible? Or us path there X% that X%-ish? what back got margins? is to a to down So

Tony Sarsam

the people it. here for Well, there's I think better --

term. call I pretty there's that marketplace the the is of, for least flurry And business, went short exited that is those X%, some from think since question has over short a course there's competitive eight the path pricing changed of new profile the I folks seven a to the answer back at who've to profit overall to years. price path competitors aggressive believe or offers your in there that X%. of And -- it, the last that a

Scott Mushkin

guys. Thanks,

Tony Sarsam

Scott. Thanks,

Operator

Jefferies. is ahead. question from next Fishbein The you. go Thank from Please Matt

Matt Fishbein

question. for the Hey, good morning. Thanks

two Just me. from quick ones

if if Just a that retail all And the around First, Is color be you efficiency, you've safety is it maybe incremental many maybe Thank optimizing increasing a you help space? it margin the particularly bit need initiatives, you employee operational Any have software? what on any parse basis be for out give more you the Is points Martin's accruals can priorities to down, But you it second, operational give little can projects The makes on outlined would year? within I can us investments that sense. 'XX. next sequential specific warehouse trucks? step get to help great. elaborate represented. more planned on worked sense can additional hoping how trying on of wondering you. there the was

Mark Shamber

would the on like as answer I'll investments. like first and the share the question let on he or I'll not as much one, Tony Okay.

relates the it of it for some the benefit range, to I that of tell you area would basis was but range going it of the that alignment. in XX probably alignment, just associated that some impact to to As was points. in Retail, have with exact, specifically in that I'm benefit not XX

Matt Fishbein

operational the Okay. color Tony? investments, And there, any just additional then

Tony Sarsam

I hiring I in there's this it'll not fact remember think can't we're Yes. warehouse the looking but at our a span size in looking we're earlier, people control our at more transportation, units opening, have operating our -- mentioned workforce -- the that the hourly expertise, across of hire additional of I some hiring only and mentioned opportunity first-line supervisor believe we of I with the workforce. size be -- to we

adding tools considers to are the we'll of to better could And So capability that that way in tools a actually people that look profile be supervisors, has of available we're efficiency. mix. a XX actually that new And neighborhood to run new for those new for for example. that the warehouses looking some to in and XX frontline be

investment a our training that's helping There's And of some also helping us put system the That investment put year. transportation resources people big a of a -- that There's doing lot this later. third-party again, that pretty of come management and process. year, will uncover against. consultant are also team this be part with a also will working that not actually we're piece. will opportunities with We in our payback

we're of and two is savings. to process. industry, that. is the one big working a bit the That, out and there's there's toward as We to Additionally, of comes money both know, And we in in think investments we're intention safety, getting terms hard our there. years be safety, that of want personnel to making really -- think realm. with that it in we items, employee opportunity organization lag safest some in more -- for longer those little kind our We long-term you in

Matt Fishbein

you. Thank helpful. super Awesome,

Operator

Research. Thank from Cerankosky Chuck The Northcoast Please question next you. go is ahead. from

Chuck Cerankosky

margin the alleviation the is that when of COVID expansion be this XXXX? business. year, that for look assume at of Tony, segment? we margin a you're there pressures to put on bringing the cost on costs to little improve some additional some Thanks. have some segment we Distribution Food Will equal Or about the had hope bit in this pressure that

Tony Sarsam

side. Yes. the actually I done side haven't by

in As those Mark both mentioned contemplated got are the earlier, we've of guidance.

ongoing have later, in some ongoing are on -- with that some we there. both the incorporated So disclosed. we we we elements took And some be that There believe, haven't of was the we had costs one-time the year. costs already costs are for that I going COVID balance early associated of to

us practices. don't those I back on see So some of stepping

there actually will there's the say certainly cost costs going but out, upsides. know confident to in, coming out and So going, cost that, costs there's there's than I that that more some come don't mentioned. one-for-one be in I'm for precisely in some COVID. reasonably as I these will investments

Mark Shamber

Yes. that I statement. would agree with

Chuck Cerankosky

on that some would be So mean there'd pressure margins this in year segment? the

Mark Shamber

had investments weren't in some to talked the about there. able think realize we there's some fully be we well. some XXXX, may things, are of we -- opportunities, there I benefits Tony, that as there mean, some mean I I to as Well,

of mean, ranges trends, out. given low because on want investments, mix a would what knowing don't based I how of what or back the So well quickly say returns that to as we offices, their versus without the by ends sense that's get lot we through without fall but for get be as mean, guidance we life go quickly I mean, And of Chuck, as from but can sales COVID any last year, this but within we're we going high don't ends case, the people during year give the we hard to BU, how to what we've and say it's or that's how vaccinated, that I course to both this having normal, doing there's you -- into returns some I were play good numbers. of home, current expect will retained eased people the working cycling year. comes a of see to how play that think in

think don't a guidebook we guiding year business any year, whole in have of easy a as any never easy. It's in for layer add complexity given I don't for. you particular it's This on segment. So that just additional

Chuck Cerankosky

you. thank Understood,

Operator

our closing back concludes to This question-and-answer conference you. Tony session. Thank I remarks. any would to turn like for over the

Tony Sarsam

great Have all thank for for just speaking earnings to quarter I today. with our want you Yes. XXXX. today's again day. call. here for a a everybody when Thank to discussion in great you participating report we forward We first look all

Operator

much. Thank you, The very concluded. call presentation. now you attending Thank has today's for conference

disconnect. now may You

SpartanNash (SPTN) 27 Feb 212020 Q4 Earnings call transcript