US grocery distributor and retailer Spartan Stores saw net earnings rise 45.3% during its third quarter, despite recording a drop in sales for the period.
The group announced yesterday (2 February) that it recorded US$7.3m in net profit for the quarter ended 1 January, primarily due to benefits related to lease terminations and income from restructuring of its retirement plans.
During the quarter, sales were down 0.6% to $782.3m, primarily thanks to lower supermarket sales. However, this was “substantially offset” by higher fuel and distribution segment sales.
The group’s retail segment saw sales fall 1.8% over the quarter to US$435.4m, with the company attributing the drop to a 4.4% drop in like-for-like sales (excluding fuel).
The company said that, over the quarter, its group-wide gross profit margin improved by ten basis points to 21.1% due to improved margins in its retail and fuel operations and a $0.7m increase in LIFO inventory valuation credit due to lower inventory levels.
“We continue to make incremental changes to our operations that are improving the fundamental operating structure and effectiveness of our business strategy,” said Spartan president and CEO Dennis Eidson. “Our inventory management initiatives are improving efficiencies, lowering working capital requirements, and reducing borrowing costs to further benefit our long-term growth.”
Eidson said that although the Michigan economy appears to have stabilised and the auto industry appears to be strengthening, “market conditions remain challenging”. However, he added that the company is “working diligently” to further improve its sales trends and manage the “controllable aspects of our business”.
Shares in the company were up 2.6% to $15.08 a share at the market’s close yesterday.