US food retailer and distributor Nash Finch has announced that it is lowering its earnings outlook for fiscal year 2005 due to a decline in retail gross profit margins.
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The company now expects fully diluted earnings per share for the year to 31 December 2005 in the range of $3.00 to $3.25 per share, compared to a previous forecast of $3.70 and $3.89 per share. The company reported fully diluted earnings per share of $1.18 in fiscal 2004.
Nash Finch said the revised earnings estimate is due to a decline in retail gross profit margins, primarily reflecting inadequate execution in pricing across the company’s retail operations; depressed wholesale gross profit margins principally relating to manufacturer promotional spending; and higher than expected acquisition integration costs.
“Clearly the acquisition of the Westville, Indiana and Lima, Ohio divisions earlier in the year resulted in a lack of focus in our core business,” said Ron Marshall, chief executive officer.
“We have experienced serious erosion in retail and wholesale gross profit margins, based on issues that we had thought were readily resolvable. Unfortunately, the impact has been deeper than we anticipated and margins will take longer to rebound than we had thought, but these issues are fixable and we are addressing each one of them,” he added.
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By GlobalData
