Back to top

Image: Shutterstock

SpartanNash's (SPTN) Earnings Beat in Q2, Sales Rise Y/Y

Read MoreHide Full Article

SpartanNash Company (SPTN - Free Report) posted a solid performance in the second quarter of 2022 wherein the top and the bottom line beat the Zacks Consensus Estimate and grew year over year.

This presently Zacks Rank #3 (Hold) player posted adjusted earnings from continuing operations of 66 cents a share, outshining the Zacks Consensus Estimate of 58 cents. Also, the bottom line increased 10% from 58 cents a share earned in the same quarter a year ago.

Consolidated net sales of $2,273.9 million rose 7.9% year over year on higher sales across all the segments, each of which benefited from inflation. The metric surpassed the consensus mark of $2,130 million. Comparable store sales rose to 6.5%, reflecting the momentum in its Retail segment. Also, case volume inched up 3.3% within the Military segment.

Gross profit grew 6.2% year over year to $354.2 million. However, gross margin contracted 20 basis points (bps) to 15.6% on soft Retail margins, partly offset by improved gross profit rates across the Food Distribution and Military segments. Also, LIFO expense grew $14.9 million, representing a headwind of 65 bps from the year-earlier quarter’s figure.

Moreover, adjusted operating earnings came in at $38 million, which climbed 18% from $32.2 million reported in the year-ago quarter. Furthermore, adjusted EBITDA grew 13.4% to $61.8 million.

Segmental Analysis

Net sales at Food Distribution rose 5.9% to $1,118.3 million, mainly owing to the inflationary impacts on pricing. The segment accounted for 49.2% of consolidated sales in the second quarter of 2022.

Retail’s net sales increased 8.5% to $672.4 million in the reported quarter, mainly on the inflationary pricing and share gains. Retail comparable store sales were 7.2%. The retail segment represented 29.6% of total sales in the period.

Finally, net sales at Military, which constituted 21.2% of the overall quarterly sales, were up 12.4% to $483.2 million. This was mainly owing to the inflationary pricing and higher case volumes.

Other Financials

SpartanNash ended the quarter with cash and cash equivalents of $21.2 million, net long-term debt of $459 million and a total shareholders’ equity of $793.7 million.

Cash generated from operating activities was $28.5 million during the 28 weeks ended Jul 16, 2022. SPTN had free cash flow of a negative $17.9 million in the aforementioned period. Moreover, capital expenditures and IT capital totaled $49.6 million in the same period. For 2022, management still projects capital expenditures and IT capital in the band of $100-$110 million.

In the reported quarter, management renewed the share-repurchase program and bought back 215,402 shares for $6.6 million. In the first half of 2022, management paid out cash dividends of $15.2 million, equal to 42 cents a share. Overall, SPTN returned $21.8 million to its shareholders in the first half.

2022 Outlook

Backed by a solid performance year to date and the success of its supply-chain transformation, management again raised its 2022 guidance. Also, it is encouraged about its performance backed by its Winning Recipe initiative, which leverages the three core capabilities, including People, Operational Excellence and Insights That Drive Solutions.

Management projects a stable earnings pace in the back half of 2022, inclusive of the net incremental expenses related to the Merchandising Transformation initiative, expected between $11 million and $14 million.

Net sales are now guided in the range of $9.3-$9.6 billion, higher than the earlier guidance of $9-$9.3 billion.

SpartanNash envisioned adjusted EBITDA in the band of $227-$240 million compared with the previous view of $224-$239 million. Adjusted earnings per share are still projected in the bracket of $2.17-$2.32.

Long-Term Goals

Management also reiterated its financial targets, which are likely to be accomplished by 2025. It projects net sales of more than $10 billion, indicating growth of at least 12% from the fiscal 2021 figure. Adjusted EBITDA is anticipated to be more than $300 million, suggesting an increase of 40% from the fiscal 2021 number.

Zacks Investment Research
Image Source: Zacks Investment Research

Price Performance

Shares of this grocery retailer have increased 18.6% in the past six months compared with the industry’s 1.2% rise.

3 Top Retail Stocks for You

We highlighted three better-ranked stocks, namely Tecnoglass (TGLS - Free Report) , Ulta Beauty (ULTA - Free Report) and CVS Health (CVS - Free Report) .

Tecnoglass manufactures and sells architectural glass and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 28.2% and 47.7%, respectively, from the corresponding year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 24.4%, on average.

Ulta Beauty, a leading beauty retailer in the United States, currently has a Zacks Rank #2 (Buy). ULTA has a trailing four-quarter earnings surprise of 49.8%, on average.

The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 10.4% from the year-ago reported figure. ULTA has an expected EPS growth rate of 10.7% for three-five years.

CVS Health, a pharmacy innovation company with integrated offerings across the entire spectrum of pharmacy care, currently has a Zacks Rank of 2. CVS has a trailing four-quarter earnings surprise of 6.7%, on average. The stock has risen 7% in the past three months.

The Zacks Consensus Estimate for CVS Health’s current financial-year sales and earnings per share suggests growth of 6.6% and 1.1%, respectively, from the corresponding year-ago reported numbers. CVS has an expected EPS growth rate of 7.7% for three-five years.

Published in