SPTN - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the SpartanNash Company Second Quarter 2021 Earnings 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 Chris Mandeville with ICR. sir. ahead, go Please

Chris Mandeville

welcome call. SpartanNash and XXXX second earnings conference to morning Company the quarter Good

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

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

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

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

Tony Sarsam

the the we supply everyone. by SpartanNash with both shortages, and bottom on Thank challenged expectations. lines and Overall, historical was for rest rising industry, chain strains and showing our you, QX of Chris prices. global been labor good Like a have morning top strong exceeding

first which am outlook. on more be I a few provide year, by our team of I'll our half encouraged highlights reflected year second in not wanted will quarter. momentum I quarter. overcame these could updated distribution. from of decision guidance. the cover full our into the heading obstacles food is second in Jason our the I the But details how However, to improve with to begin proud

and retail resilient the trends segment, mean cycled top our from our proving benefited have higher inventory home by an year’s unfavorable remain share allows inventory for the our chain inventory to the and provides operate team's year proved distribution agile, traffic to two increase solid efficiently has warehouse In and resourceful X.X% million shortly. in to to more taking Our basis, and lift. are worse recent a initiative to costs begin. actions swift levels. strategically compared $XX and over months. quite team food improved are last I'll chain line overall our foundation during quarter. on reduction persisted XXXX This this profitability. manage COVID store more the XX.X%. relative On transformation labor demand as in comps the Sales for at a and supply reduced centers The prior supply has Nonetheless, The initiative the transportation from the quarter.

to expansion digital center. over seen opened digital the XXXX. of Regarding since sales, we've fulfillment first our And growth XXX% micro our we recently channel, continue

shop returned decade we across military down headwinds. to traffic continue fully pandemic. during not realize channel top has Domestic to yet after elsewhere segment, shoppers bases Lastly, our line the as the the in is leaving

indicators, initiatives gross fronts. we on progress to working our produced have team leverage a making our caused is also XXXX favorable has results. which exports. are regard proactively segment key executing trends expectations, margin within trends triage With many already has The team to to these positive While been performance

pricing continue to and are continue marketing. build year. our assortment, to we our momentum Notably, and improvements ahead through Our the or private year-to-date we label within efforts expectations make

steps Specifically, we've new our to category. the and labels redesign in taken items fresh launch

our that Lane private of are the through our home expansion more also label Fast getting in and offer products delivery. ready homes locations We to eat

to We possible focused inflation, our consumers. with is team seeing and efforts navigate actively company. trends. of margin passed within results exceptional Overall, pandemic gross we're profile, even cost cycling increases, Meanwhile, on as see gross across on the we're related the procurement with negotiating our suppliers. continue and to broader must margin favorability to we our some best the terms satisfied which uncertainties be We're our

focus capital saw Regarding continued in strong human reduced safety our and indicators, incident resulting on we safety, to performance intense our awareness. due rates

meetings. safety our before acts critical support in appropriate, first The to people playing safety of mitigating improvements is team of to strategy. safety introduction the stretching is wellness injury process all helped small promote universal incorporating team new role and the implementing our a surge. performance. measures our discussions myriad energized recent prevent strengthen routines newly Our to safety implementing These of us COVID Everything a to also from to response

We associate market. are challenged quite and of labor companywide, unique market XXXX put challenge this labor competitive perspective into currently to positions. open still we highly the retention over this hiring due the with To have

we the imagine, become a eligible might wage for number which required pipeline recently positions, raised has time more candidates. of of proactive you a for length in maintain have attract measures top shortened To of also help talent. associates us we numerous position the We've accelerate benefits. for taken As to helped hiring, starting to

more we investing of and we're are number On excited our associate associates. for We're launch and as programs on as diversity, frontline inclusion to focused well training side, development for recognition. a heavily equity for associate And recognition the and programming new also retention in the leaders.

days We benefits retail total and and reimbursement, our tuition are wellness rewards stores, additional our expanding with discount more.

on with are ties are initiative, that The greater lead culture. through will Starting the Warehouse I address blueprinting our following our of of the challenges phase practices last also best will short capitalize the control the to As we It announced details provide initiative strategy long we sales quarter. organized initiatives transformation operational to to across first which into resolution. Today for to said warehouse efficiency warehouse completed, the on improving earnings operations, will issue standardization steps people streams. network inventory to chain and term have supply want taking term. work and operations the ultimately of we supply recently win this procurement. KPI we in network for chain. Based and to in guidance our these initiative and we're our incorporating levels. significant war process to growth us optimization, this we talent. and directly this planning, war allow we combination call the QX our on enhanced facing more operations service On final costs. a labor distribution And This network

serve best This respond the As to ability organization. to for functions our capacity our to match real to the transportation teams broader with planning, This help labor all operations to quickly is Improvements more make lead integrates supply and inventory, time supply our necessary of sales customers' our current those to are changes to time that process in us operations and network. chain chain and needs. sales implementing business demand. and capture environment the to more This the adjustments we operators. the the and will provides excellence improve best execution planning fully issues will ensure that a process insights way and bring robust across business

inventory on stream, the focus key optimization of Regarding will work we areas. couple a

in the efficiency network. our distribution We data reduce inventory This will and will manage improve across leverage better entire and excess inventory. analytics to centers

on to points we'll the to allow The transformation to a project We initiative our rate more of location chain In To basis. to the along decisions. have evaluate temperature right and supply expected in short, ensure where driven to progress also have take eager will capacity XX right warehouse at time. class the summarize basis run continue actions help is the transformation data that products financial perspective. will benefits supply and chain updates these us by we on We're from provide this supply chain will us make a way. XX right buying

I've Along Investor walk coming months. an of to well status broader I'm in strategy we've update to as for Lastly, be performance with team, more through pleased refresh update Jason? supply will provide I'm our now now to SpartanNash enhancements to the the full to outlook. year turn share with excited plan We I'll December. information strategy. on leadership updates on over our you financial the in Day detail we and made almost the this Jason holding an as to the been the transformation. a that the our on call chain greater comprehensive and year, with lookout announce our for community on

Jason Monaco

everyone to on welcome And Johnny. Thanks, us call. today's joining

sales quarter or the $X.XX versus sales $X.XX Let's for million $XX.X Net second jump the X.X% into detailed second quarter billion. by of to results. billion decreased XXXX

We with sales, sales are prior included to well the which year by year retail compared pleased especially COVID-XX. in caused trended the surges our how current

which Additionally, we've customers, the continued prior distribution with decline certain partially existing offset growth food from to see year.

and EPS improvement an profit in at in segment accretive rate to mentioned On food driven mix in increase the rate, year. per adjusted from within saw the quarter. as EPS to diluted sales and I prior by to Profit $X.XX share driven year of of a in by profitability where quarter for retail declines decrease Gross by the came an food improvements change volumes the to distribution year compared EPS XX.X% partially gross as distribution sales. were XXXX. quarter last These prior quarter basis, more XX.X% was $X.XX share the in $X.XX offset GAAP Our an second The well our we compared the compared in in earlier. to overall per the the margin, $X.XX segments, was military growth was lower

current the year associates of to conditions, to Medical return and as rate associated costs to levels. primarily the healthcare tight with quarter increased chain in our due compared usage incremental quarter, COVID labor supply Lastly, pre expenses prior

food as categories quarter the of was segments, of balance in Inflation surges. we or increases Further, partially from further see saw quarter. sequentially, The to effect. relatively our $X.XX year. pandemic Turning existing quarter the X.X% growth price increases offset quarter have some by billion continued distribution driven last steady anticipate early food the certain significant by as second We but to and in in with still the by was progressed into distribution upward third $XX.X year's the for movements did between decreased trend million suppliers customers. within also sales taken we sales the decrease an net the

customers. items and detailed volumes. quarter table due that the for $XX.X the adjusted totaled to totaled quarter increases versus operating lower $XXX.X earnings release. was margin the $XX.X year sales for impairment three in million, earnings the sales asset the However, impact offset in as excludes million. Retail quarter. our The restructuring rate and in prior we yesterday's other segment prior came Adjusted rates operating of previously year in impairment operating these by noted, passed charges. quarter to earnings be second the charges earnings X.X%. of and food net the quarter compared a quarter operating we favorable $XX.X decline were These chain have million million increases compared through increases of of million reported the second in of will supply operating earnings Adjusted in Reported lower of anticipate to XXXX, partially higher to distribution second the for million asset $XXX at expenses a $XX.X and

down Our due of the quarter, sales comparable for in X.X% the effects year. prior the to were pandemic favorable second store the

sequentially as sales an from up focus However, comparable XX.X% towards basis our consistent execution two delivers. shifts retail the home quarter food the were points of at increase first and of year on consumer XXX persists

million, million reported in $XX.X the segment XXXX quarter. in $XX.X retail in quarter second Second at earnings came operating to compared

million domestic on a the falling prior in volumes of $XX revenues impairment the by adjusted year. significant and addition Retail year to Overall This about operating mentioned. implemented sales primarily margin million. $XXX in higher charges expenses. commissary impact adjusted domestic fuel restrictions was at continuation higher compared operating is Reduced in down access by prior the million $XX.X Again, primarily $XXX In exclude due the decreased the continues prior were to drive second a asset of to This declines to commissaries lower sales. million domestic commissaries. year impairment quarter decrease count for sales and and million healthcare the net rates, restructuring earnings of basis based in driven reduction at restructuring volume I XX% was from traffic $XX.X XXXX transaction foot year-to-date charges. asset over compared Military quarter, second earnings to in quarter.

reported decline $X.X in second quarter the in continued to compared quarter, to military segment first came fiscal fiscal of compared the significant same In company second operating activities, in in losses reflecting $XXX.X the from quarter, XXXX of million over in volumes. spite XXXX, generated XXXX. and the the operating at Second in million adjusted period of $XX.X half in $X.X the million cash improvement million

quarter favorable second from debt over operations year pay cash million been the we from million expense term $XX year. quarter. generated last flow down increase reductions of quarter. cash The during also to interest second primarily long that quarter resulted alone, The at second down compared in the million continued substantial the enabled inventory relates operations second Looking $XX.X this $XXX in year, to in strong debt presented last pay of strategically during the to performance to balances The in compared us cash quarter. have

the company $X.XX During equal in per billion the cash $X.X quarter, dividends share. declared to common

We during also repurchase XXX,XXX per quarter price the of $XX about an share. average at shares

compared million the at fiscal Our Combined $XX.X the in times to leverage second to debt term in to balance, $XX.X compared XXXX. two with decreased our long our was quarter. reduction year the ratio times of end quarter X.X EBITDA adjusted million, prior

to As is diluted range in as XXXX XXX raising press are low covered we profitability on to guidance from afternoon's half. per release, Earnings per into continue momentum share second XXX basis. a we expected end our reported share the our the now of yesterday range

supply and continue our our $X.XX EPS is by in $X.XX to to range expected the recognizes adjusted share. segment, to impact as similar most business retail in trends. from investments feel our felt well tempered profitability is already million sharply While include of executed now $XXX in we and performance made These from cost diluted range chain, call. to of chain, the and $XXX Adjusted the supply quarter availability we per commissary chain. domestic expected the across This first discussed military military, but supply in it's EBIDTA continued strong within what also our the earnings have the we range labor, as wages in headwinds million. We've business trends retail to update to

a gains announced the expect impact the investments transformation of expected modestly related previously on initiative, to chain be net guidance addition, XXXX. the includes and we earnings to basis In now supply for which diluted

it Tony on year. we you will As the progresses mentioned, this continue update to throughout of regularly this exciting initiative as balance

our reaffirming net to guidance are We as it relates consolidated sales. XXXX

a However, perspective. from segment we performance do a expect sales shift in the

will Military of down our last previous With comparable expectations. we to to further decline from from from XX% results segment, retail continuation X% X%, X% decline between to in expect an the year, now now positive expectations. of previous increase the sales be our sales retail and a expected are X% that X% from

last quarter, be down well to sales And the distribution food to both turn the as expect reflect call the X% expectations year. back over our will observed Tony. to the updates for trends of updated year. I'd remainder to now in like continue These the We as X% from

Tony Sarsam

you, very not pleased our satisfied. In year, financial we made Jason. but yet the Thank this we're progress we're overall performance summary, that have and

industry the like over position regardless it back deliver open to operator diligently work will the our or the of call backdrop. up for questions. success us turn to for I'd that, and upon KPIs your We With to

Operator

BTIG. sir. And Please will [Operator from the first ahead, Saleh come with question Instructions] Peter go

Peter Saleh

benefit should I start just we Great, transformation? basis mentioned half there on? elaborate that is the to of that year that you he the to second supply is a mentioned the that When XX Jason, ongoing. Tony and thank on points. believe XX see you. margin could think was I chain that was

around details include also you have more this the some work you. quarter. does just and Inventory that some Thank that So guys that done of

Jason Monaco

have A you about Program, just talked a chain question the about what us. going great and Transformation on build ago. itself a super to this Pete. few with it's blueprinting. has We're Thanks started headlines to and The supply where few morning. Tony this for program morning, to Good excited here moments take

talked and last reminder laid quarter, announced specific Just work we've the that on that in a and completed we quarter, a Transformation about begun within that as the been blueprint out blueprint that Program program.

run year, of of amount As for you next can very we'll in industry this a progresses. rate our color that those as that the begin the guidances you about imagine be we'd late that towards changes the XXXX. as small range talked it's to quick building detail we're long love expectation that the that And on Tony more an from will into to And give year about benefit progressing a share seeds we've what that within very can more What this with is year. day the at program how year, And and expecting we'll early ranging. improvements included well.

Peter Saleh

I inventory, just $XX would this Or should expect color can that a then that helpful. more we end us be of bit guess, one you into back benefit little a on the details of give guys is Just quarter, And time the on really the just million, you. to Thank on, in that nature? Great. the year? saw more continue you

Jason Monaco

Thanks, The Sure. strategically Pete. inventory was targeted.

and out with think from recovery that in expect carrying than And that we you is And in began levels in more suggest assess what a close needed a inventory think and through the about needed locations where up a as what we we had are took inventory built would effort concluded also I we back little I on about quarter. the relatively way, reduction QX. way program. the stay The That in our year. remainder that the the to partially then would of we quarter. much will So or it first too the that of inventory catch step inventory I it's work

However, buy value will on opportunities, that they down vacillate based to front. for up create on and the and potential

up some think capital check. base, So as working which be about generally, expect variability and a I'd in this there'll the I keep But from to down.

Peter Saleh

Thank Very you much. very helpful.

Operator

Capital. Mushkin ahead. come Scott question Please RX will next with The from go

Scott Mushkin

thanks questions. for guys, my for Hey, thanks taking

you about was focus And I the And are will buying term. guys it's Are opportunities, potential it? be I any And how uptick a thinking to question then of a of And the wondering, So the just has to do want as and you to you outlook, COVID lot bit. little to other that? I you seeing the forward guys through guidance? bit sales think be surge inflation little alluded rest a more in the going we're you think just year some short opportunities. seeing around, look upside because

Jason Monaco

Scott. Good here. you Hi, to Sure. have Nice morning.

I Let's spoke modest was here. maybe I story inflation. But Inflation with it little a story the earlier there's of kind share start about as bit quarter. the is to that with the relatively overall the group within want within

a CPI a inflation of back, a we inflation wholesale our for modest food relatively standpoint, X.X% in look business, and at from kind levels, the X.X%-ish us was And running for about kind Just the reminder, when you as step at home, food quarter. our quarter. of second at ran

QX the lapping of However, there inflation huge was quarter was spike from a pretty from throughout to XXXX. of impact And year-over-year big beginning an the there also impact end. in acceleration the protein

got of noise So a little in the data you've bit there.

our areas. split the the end that right the that that in through increase rate close by of was of Importantly running publicly to CPI available high grocery and between with X% business at kind distribution around that's that business running single running CPI food home, kind primary two of The is really the meat inflation BLS, the was food quarter digits.

protein much the itself is As you variable meat and know, much cycle. runs on a more produce and shorter

the see business. going piece in to and you're downs ups So that of more

because inventory. short-cycle also the You see less opportunity of for obviously

QX. spike similar So, kind inflation look some by on last with publicly prices in big year of meat we proteins, to of available on stepping the inflation, also variability saw back impacted data

does to for set buy. what continue for mean ourselves So, by? successful forward We to be that forward up

One of forward right right inventory correction ensuring space the our buy, available. to the had and of ability and the should be goals products capitalize was we

part exercise As that you and themselves. the there from of it's not increase obviously, the driving products vendors some what's button isn't there price know, push and a are availability that's

will to upside we not to food, to capitalizing the inventory labor and what forward now fourth hold different half big the third to market. like continue for that's for big back maybe build but to to inflation to inflation buy Tony that year. environment, I'd into an about quarter the So, cycle a little X% continue rate it price change, pursue seen and on remains broader X% the wouldn't of just into a is this in be like year. quarter, the where I we We're bit of and but opportunities because a in seeing into that talk look to ton the a bulge it's will into change the hand over getting a

Tony Sarsam

is Hey, Scott. Tony. This

couple well. to COVID question Just your comments. I'll of get as

implications pretty through on inflation inflation efficient business. we've and piece, forecasting. our having we we're discussion inflation particularly at in historically, inflation here And So, is historical been passing have been of around the the wholesale versus current our the one experiencing

are there benefits there. so, And

low this elasticity that inflation. efficiently on the I wholesale think that and that we we retail very and case that will the as will be believe well through relatively pass the between in businesses,

are than subject that's couple the labor inflationary element. inflationary the the So, to also in labor based I has I more inflation in that some to the last note just been think The is cycles. And just of it thing significantly one is positive. of we want of cause based

same will current a just find concerns we of gains the about couldn't the about have that some resurgence. efficiency some the those positive summer the questions advent more business of But year other from suppliers talk probably has part of it's the maybe certain our we'll in and ahead really they taking to reality the continuous. kind The also business offset some do businesses that, have us topic big saw and That's some holiday discussion been think, we in the delta subject surge early and started for that we'll inflation today about and are really upsides. Under mixed through that pass and say have habits a do the sure think very very, some while with implications people in retail couldn't pragmatic labor. of our coming our season environment. costs. want to on early the of and are. last that picking out what other sticky I'm COVID, the year. of they variant do the things things up, will the So, for get will strength of little as and the this I is cost of summer that's and to their this some that they It I'm -- I for and a We of some

as So, that. be as visual. government the But well extend for likely we're action from some a SNAP very current there impacts policy very, as vigilant obviously recent we benefits. and own team that will our on as lot on stay that most in behaviors believe There's to consumers, and we our space how going being well the benefits own

So, there. mixed all in

I think there some be upside. will

Scott Mushkin

much. very you Thank Perfect, guys.

Operator

Greg question ahead. Research. will Wolfe Please, with from come go The Badishkanian next

Spencer Hanus

Spencer Good Greg. Hanus morning. for on This is

could margins be chain to going to levels? a scenario What for are a you is run rate savings. I improvement to And where factors building you're then I can that guess back in biggest you timeline? supply see the driving that mentioned an XXXX think sooner? get there And XXXX

Tony Sarsam

crack take Great five as of optimization project; key involves well. components of detail turn and detail a of and that and training to a process terms project amount tools. [indiscernible] is fair the of is of are for it in new there sort very Jason questions. and I'll over comprehensive This

over year. about take work a process the will of place course that So,

As across mentioned the those we'll in refine benefits more next our as network. benefits year Jason some really toward in this see end earlier, the processes we coming of of coming year and

looks far, probably that have and make we'll work of I itself. improvement seeing start it's continues certainly to some this so early a of continuous back that toward the benefits So, it terrific this spread, our build year. to think XXXX, idea objective the on It's the we'll getting end but to

the establish processes. project we through, once is will So, also additional

sharpen come. and continue think technology process years likely technological that come saw that to to that We I and will in involve from improvements more more implications

a So, to and that our changed But is just as are place, have applications possible; world assuming biggest to supply to our that get the be objective mixed there. the our some back chain in there focus efficient not project. numbers getting one-year organization effective as

Jason Monaco

in made Yes, comments, Spencer, gross building on on business. distribution We've here. reference things Tony's side food a margin the couple the of great progress I'll highlight just for

XXX up are in years two from margins the were by where basis quarter gross Our they second about points ago.

pre-COVID. So,

chain XX and why chain that is chain fair that of points. that capture phase improvement of first Now, margin continue And and it margin the that's X to to phases and supply Phase we're supply largely of expect back to the the enhancement supply be expense be and swamp improvement has to multiple kind of kind of build basis XX that bottom then to push line. we to tackling

Spencer Hanus

military What at them just on distribution, there back control? it's think And happen strategic just alternatives potentially explore refocus switch your you what some in do think helpful. that that's to to to I time your customers? to for [ph] do point retailing second. win If is a food time at and little more bit could a DeCa it, for needs you Got

Tony Sarsam

very and base alternatives. openings, to closures, been might in closures and happen I commissary a think got desirous some has making chore folks and think them. and facing and openings that last a of there loyal of very complicated Sure. big they they confidence I have is progress team the it's lot of and are a that We that the Well, circumstance have closures the [ph] moved shoppers DeCa and-a-half, other think ahead and I year

in have seeing I that some as think of numbers. habits those sticky and we're well the been

So, on. cut actually got our ideas to they're know I working for their From is they've clawback. they've can them got help. work we perspective, One that a out lot a get things. couple think of their I

in We what Honestly, to certain. and the can with do they be them can bring there are in engaged on those that a there's ideas out fundamentally, back. fully customers customer need partnering

I think involved for chain. all for there's profitability supply that room the players better in

in everything remain that confident profitability supply world our to we a that think MDV. and certainly lot opportunity has just about specific to hard changed. That there's chain, products mix a of supply we from chain on network -- is better the that how we in how cost So, there's where working and mentioned, related and we think that about is team

have now a just to is better change opportunity ago. different to We network few serve was years our a business it the what than

So, business our is That's figure one, job, work how out and profitable. primary make to that make to focus. it our

Spencer Hanus

that to guys the I have commentary Got And it. just wanted you follow-up made. on then, labor

yet? then in are in quarter, of that up know? few the you a times should guys to there sort How mentioned it signs about for better investments about Or you size those this of of you quarter? made is stepping distribution early retention retail investments And last seeing think wages. You the made too we still that

Tony Sarsam

Yes, great question.

north wage and in can't from have believe better supply but early yet. that candidates about it's that the better It's chain. a entry We're numbers a probably been in month come months the wee probably couple a We the increases app So, mention [ph] just of bit were too I inflow. level XX%. retail and seeing

this come need increases to as that anecdotal make retail as -- even this applicants; adjustments The place. get that we back so in even strengthen hey, by selective I and we and better. believe some better at going number early is believe pretty increases components a better year some stickability get we're well going additional So, with we're measure. to sizable we're confident our little to getting actually applicants, work we

openings. costly. of amount pretty it so longer to contractors in overtime I are also costs we shifts had some extraordinary also been party that cover labor have experience challenging have has and from -- everything associated yes, third because importantly, for to think the are we've that environment working that the In cases, with been because people the working

I payback it a actually think increases gets room to that have we base stabilized. pay make have as our in

on bullish and pay war but a on that being and aggressive help as tool feel use we to So, thoughtful, win this talent.

Spencer Hanus

it. Got you. Thank

Operator

The next ahead. go Matt Please with question will come from Jefferies. Fishbein

Matt Fishbein

morning. good Thanks questions. Hey, for the

follow-up the to situation. shortage Just labor on

how pressure, it kind break where I versus pressure just for in it's any And can other posts macro few having you your are whether there wage can you're seeing, also create Day, unwind you for that CEO, start you've Like see to some pressure We'll guess this wholesale? relative type now, that example, from for a Labor of a a this with battled seeing wage to If flag as different the that us of the perspective? months of that. on a for in future? bit instances catalysts you're is more retail career faced out

Tony Sarsam

Yes.

it is Day like day Labor So seems nowadays. every

and would bit our say seeing a foremost, distribution pressure First more in centers. little we're I

the their you people lot level a amount of started, there's because career think turnover, kind a of fair we of entry work that part-time, that the if have retail of at lot end. churn nature a young getting is think I of

So, business on how percent XX-ish of nature historically, the in that because the we're come and of retail space. And there. turnover be seeing that's in scared you XX% people seasonally just not off kind would turnover come by

those most and history the in you'd business, like see side been, warehouse business. turnover XX% more the I've something that On of

jobs, higher actually working careers are have people warehouses. about We're XX% You turnover and experiencing paying there. slightly making

of lower worse a part that turnover. would a historically business we had So, our turnover have and place in

one good, say [ph] driven based the seeing unemployment couple neighborhoods. and And of acute had there was right ones But would of it's dot-com on into X% and XXth then jobs our grown economy. getting end people you a lower had like lot century, more is, as well. that's I larger of economy. is of the pressure, dropped getting the in strain gangbusters, talent points we're what And our strong because to distribution consistent around you we that's different of phenomena, down when the the some some were where the by of more What's it's in the Congress the labor almost think about taking So, pinch last into centers. increases exclusively

more of of the sense, good about one of it's problem kind a those as you think So, in have. sort to comprehensive

are get exacerbated growth there's that's growing. same the government reality a about fast That's much think programs benefits on of folks of and the There's government the labor latent it's other market. our one we cranking at is too than to very per strong. value for sum not operate the of the been in fast lot imputed and $XX people pretty enough I national same. a has is can't the by economy into This of a the wanting in, [ph] significantly from benefits and Our and In about potential, number, get lot have in, for but state have go total different we that just federal practical we and keep need find unemployment and there's time, economy folks hour. to that not the an significant can't

that into they're a not see who for if best past. some to take-it-or-leave-it that better as a wasn't the crunch stabilized that little alternative in the market, we'll get favor. getting is the there's job a the mix. of bit applicants that cases, we new and competitor they the as and so, difficult they look And on particularly in have we because us labor think lot may in I that have in different working like [ph] more of this a are the And gets of other more, will really footing of a now But

different question. answer what's that's anyway, to So, your in

new as I for component think that business is a society. us

Matt Fishbein

color. background, all walk product to on also were the pandemic? Distribution you've through pre-pandemic. question helpful. from through just you Where to Food relative It's for us product broader pandemic, to you distribution few And out that in terms of guess, expect we shake profit given and where bigger of a to Tony, you seen fresh wanted percentage end your component Thanks longer kind segment, shake out Can last by kind changes sales really where I here or question did that of year, the of next in are the mix ask maybe term, I now? mix prior perspective should it years? the your over is the the where

Tony Sarsam

great question. Okay,

versus So, don't number change as far the have have the that, handy I pre-pandemic. Jason? you on Do -- mixed

Jason Monaco

moved were naturally HBC-type with goods. the and products nature, I as hoarding emphasis of characterized that No, that closing. because were cycle Matt. cleaning decline part there elements or cleaning what then kind a was that in general fresh highlighted, pantry-stocking I've there in the What And towards around delis store a in of of was

saw as What a both into those place products seen downdraft categories, come of in the deli retail business. both see our as kind return we as I there. Distribution, fresh what So, kind as of value-add recoveries recently as we've a you characterize to bakery this in the would and and well it Food

X% in comps mid that comps cetera, piece. as color You but part mid-XX%. and growth bakery, deli, promotional the with a to ask, the from exceptional We in didn't range retail maybe execution. excellent of results of the our forward kind in et bit value-added the really And was sequentially retail retail little saw of on step a well as just QX,

outlook we flawlessly of down QX more step levels, execution, to frankly a and around to uncertainty. in continue QX from reflects also going Now, expect execute forward, not but but because QX our

to digit our X% in expect QX, around on basis, mid high-single a X% QX-QX in like comp look QX. growth more We

So, of of and then our of but kind of asked supermarket updraft of strong food, changes down in really supported to that the business. very some but piece those still mixed kind by the a you about step really close

Tony Sarsam

on two-year course, Yes. those comps. of numbers And the are

Jason Monaco

Yes.

Tony Sarsam

will focus to think for store. be our value got around some forward semblance as the really fresh. come I disproportionately opportunities we of perimeter one the people and We great think on we've normal, where the that's new going of growth back that's they And thing think

and there more So, be will more focus there. more and bias

Matt Fishbein

you very thank much. Okay,

Operator

with [Operator Please, Capital. our Instructions] next will BMO from And Kelly ahead. go question Bania come

Kelly Bania

taking Hi, good morning. our for Thanks questions.

was help there if range, you I was One and first the of can that's initiative. savings follow-up quarter, sounds the increases to believe curious it's just I or impacting XX. to XX last that of the discussion now or us if the timing any XX supply a on wage there? like just basis XX point and chain it color

Jason Monaco

same It's apologies. reaffirmed, Yes, misspoke, XX my quarter. the I if last $XX it's $XX It basis to points. as million It's million. to XX was so,

Kelly Bania

problem. No it. Got

guess Another just maybe I kind the question; why of coming dynamics, in thought follow expected, than maybe comps help I have would Maybe maybe understand us mixed just terms suit. better retail would distribution in that's not but case. of some the there's

Jason Monaco

question, And Yes. great Kelly.

our growth, seeing if similar we're So, food retail of you kind core performance what in what among independent the dig into corporate to business. we're distribution we customer as seeing characterize our

out the underlying of Now, Food Distribution behaved you're what seeing of than that are other the aggregate business and mix traditional changes Distribution differently pieces underlying come that's and the business there result. grocery some or Food

Kelly Bania

reach where them help the today initiative? targeting understand are to can and you Maybe you're us service levels where under just Okay. new

Tony Sarsam

are measure way service, levels, two ago. lower run about points service would we normally basis than we probably what we have the X,XXX So, years roughly

months. in to that the year from mid-XXs to ago made terms was last number they to improve same from little our as supply terms community worse That bit as broader was our a a so speak. And compliance out -- manufacturing four mid-XXs additional that three in manufacturing of well processes actually the a that bit quite for to their in So, months the sort towards, getting us. we've as as ago, the a progress the of of and a been gains we've community lower service stalled the few about

customers possible delta to getting all back our right efficient that actually into headline now. are as their at than the a So, headline way to yet. versus our our is factor in the we not but still the in as stores, more as and operating supply service be manufacturers refine out That's to bigger the product previous levels. They're process that complicating

have we other experiencing we where services. we to we tend we side-by-side we folks services what pretty best as other are actually comparisons, get survey tell feedback are multiple and like can for people really positive As use outperforming that as

with vendor our get is chore feel next there So, and to the and good we their about manufacturing get internal stabilized the out. process frankly, supply

Kelly Bania

Okay, helpful. that's very

one Just more me. for

sustain basis margin made strength margin's going but two forward? if the that you eating into about about you costs curious can years unpack you for us some can maybe XXX comment and versus up But points that upside. just gross You gross of gross think margin the ago, if that

Jason Monaco

some Yes. can structures Kelly, I the be supply to food the clear. and chain I the expect rates and, operational we're but deliver business, which expect that labor a margin through It's customer addressing transformation. and which to referenced based line, own piece, distribution a everything going -- mix we just that for can on fill sustain back combination challenges sustain of key the the I gross as on the line practices, is market, Yes, to product prior the to supply our and challenges that profitability some don't want at to to Tony improved bottom from improvement assume, is the to chain the gross in with referring lagged. well margin the to Frankly, haven't mix as of we fallen part us it. top and margin due really, of get forward that

Kelly Bania

you. Thank

Operator

the ahead, would Tony session. I This for to back over any question-and-answer Sarsam closing remarks. go to like conference sir. concludes our Please, turn

Tony Sarsam

We Day. All to right, to We're of in thank for you look you and forward all on see report XXXX that. forward your Investors today's results thank out looking speaking many quarter And all, to for to our the December call. third on hope November. you, really really again, participation in you

great we'll that, this day. conclude a call So, wish everybody with and

Operator

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

now disconnect. may You

SpartanNash (SPTN) 19 Aug 212021 Q2 Earnings call transcript