SpartanNash bullish on future with military commissary PL contract

BY Michael Johnsen

GRAND RAPIDS, Mich. — Fresh off winning new private label business for military commissaries, SpartanNash noted that its robust own brands initiative is feeding an enthusiasm for its future earnings potential.

SpartanNash on Wednesday posted $1.9 billion in sales for the second-quarter ended July 15, representing an increase of 3.7%. The increase in net sales was driven by contributions from the Caito Foods Service acquisition and organic growth in the food distribution segment, the company stated.

"We continue to be very pleased with our food distribution segment's performance despite challenging retail market conditions, as the creative solutions we offer our customers continue to contribute to their success as well as ours," stated David Staples, president and CEO SpartanNash. "During the quarter, we began shipping private brand products to U.S. military commissaries and look forward to the continued roll out of this program in the second half of the year.”

The commissary operator Defense Commissary Agency is the equivalent to a $5 billion retailer, Staples told investors Thursday morning.

SpartanNash has approximately 250 own brands in the commissary system today, Staples told investors Thursday morning. That assortment will grow to approximately 425 by year’s end. “Our private brand initiative with [Defense Commissary Agency] is progressing nicely and we began shipping products to commissaries during the second quarter,” Staples said. “With DeCA’s stated target of up to 4,000 SKUs in this program, we have the potential for substantial growth over the next two years, which would result in a significant improvement to our financial results. As we have previously noted, our strategy with the military segment is to be the best-in-class provider for DeCA in these Exchanges.”

“We continue to enhance our private brands programs for both independent customers and corporate owned stores,” Staples said. “In the second quarter we announced the launch of the Our Family brand into the Michigan region. This brand will replace our Spartan brand and will provide us with a system-wide national-brand-equivalent or better-quality program, providing a larger variety of product offerings at a lower cost to our customers, and will allow us to streamline our supply chain. Thirty retailers in Michigan already depend on the Our Family brand,” he said. “We’re excited to expand the brand and introduce it throughout our distribution network.”

Additionally, SpartanNash continues to expand the Open Acres fresh brand product offering, and have begun to incorporate its own fresh cut fruits and vegetables into the brand. SpartanNash also continues to enhance its expanded Living Well offering, which includes the natural and organic Full Circle private brand line and a significant number of new SKUs across organic produce and healthier specialty items.

We have extended significant effort to build an industry-leading private brand, and after recent wins such as the DeCA private brand worldwide program, are now being contacted by new companies to potentially help them drive sales through a wide variety of private brand offerings,” Staples said. “For the second quarter, private brand unit penetration in our retail operations was 21.5%, up 30 basis points from the prior year quarter, whereas the national average was slightly negative during the same time period. We ended the quarter with approximately 4,800 unique private brand items and we continue to enhance our assortment.”

In addition to posting quarterly results, SpartanNash named Mark Shamber EVP and CFO effective Sept. 11. Shamber previously served as CFO for United Natural Foods, a specialty and organic food distributor. Following his departure from UNFI at the end of 2015, Shamber has been working as an independent consultant and serving as the vice chairman, board of directors of Day Kimball Healthcare. Earlier in his career, Shamber worked in the audit practice of Ernst & Young, and in the finance department of Reebok International.

As SpartanNash's EVP and CFO, Shamber will direct finance, mergers and acquisitions, treasury, internal audit, real estate and risk management. He will report to Staples.



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