US food distributor Nash Finch has reported lower third-quarter net earnings and said it is disappointed with the results.
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The company said net earnings for the third quarter ended 8 October 2005 were US$11.0m, or 83 cents per share, compared to net earnings of $14.6m, or $1.15 per share, for the third quarter of 2004.
Total sales for the third quarter of 2005 were $1.47bn, compared to $1.19bn in the prior-year quarter, primarily reflecting the company’s acquisition of wholesale food distribution centres located in Lima, Ohio and Westville, Indiana effective 31 March 2005.
“We are disappointed with our results for the third quarter. Profit margins suffered as a result of inadequate execution in the management of manufacturer promotional spending in the food distribution segment and in pricing in the company’s retail operations, and higher than expected acquisition integration costs,” said Ron Marshall, chief executive officer.
“We did not fully appreciate the degree to which the demands of integrating the Lima and Westville divisions would divert attention from our day to day operational execution. We had expected to be able to manage the issues that led to the decrease in gross profit margins in a manner and a timeframe that would minimize their financial impact and to begin realizing the financial benefit of synergies inherent in this acquisition sooner. We lowered our earnings forecast for the year as a result of these issues and are executing plans to address them. We believe an overall improvement in margins will occur in 2006,” he added.
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