SpartanNash (NASDAQ: SPTN) reported Q2 EPS of $0.60, in-line with the analyst estimate of $0.60. Revenue for the quarter came in at $1.9 billion versus the consensus estimate of $1.96 billion.

GUIDANCE:

SpartanNash sees FY2017 EPS of $2.18-$2.28, versus the consensus of $2.30.

Highlights

• Consolidated Net Sales Increased 3.7% Driven by Growth in Food Distribution Segment
• Reported Second Quarter EPS from Continuing Operations Improved to $0.56 per Diluted Share;
• Adjusted Second Quarter EPS from Continuing Operations Improved to $0.60 per Diluted Share
• Experienced Food Distribution Executive Mark Shamber to Join Company as CFO in September

Outlook

Mr. Staples continued, “Our first half results demonstrate the continuing execution of our business strategy, and we are excited about the growth opportunities developing in our food distribution and military segments. As we integrate the operations of our recent acquisition, refine and expand production in our new Fresh Kitchen facility, and onboard new military business, the positive momentum in our distribution operations will continue to drive growth as more customers will benefit from our expanded product offering and innovative solutions. Our strong track record of customer satisfaction and supply chain capabilities provide a solid foundation for continued organic growth and a healthy pipeline of prospects. In our retail segment, we are committed to providing a great shopping experience for our customers and continue to pursue other channels for providing quality products in a convenient and affordable manner while ensuring our merchandising efforts are aligned with ever-changing consumer demands. During the quarter we introduced Fast Lane, our new online ordering and curbside pick-up service, and anticipate rolling out the service to as many as 50 corporate-owned retail stores by the end of the year. Despite the difficult retail environment, we believe we are well positioned against the market backdrop and will continue to evolve our merchandising efforts and customer personalization initiatives to deliver an even better experience for our customers. As anticipated, we are beginning to see an easing of the recent deflationary pressures; however, we do not see a return to originally expected levels of inflation at this time. Given this trend and the difficult retail environment existing currently, we expect comparable store sales to be negative for the remainder of the year. As we move into the second half of the year, we remain committed to both top-line and earnings growth and delivering long-term value to our shareholders.”

Based on the first half results and outlook for the remainder of the year, the Company is refining its guidance for fiscal 2017. The Company expects adjusted earnings per share from continuing operations(7) of approximately $2.18 to $2.28, excluding merger/acquisition and integration costs and other adjusted expenses and gains, and reported earnings from continuing operations of approximately $1.83 to $1.90 per diluted share. For the third quarter of fiscal 2017, the Company anticipates earnings to be flat to slightly ahead of the prior year as continued strong performance in distribution operations will be partially offset by slower-than-anticipated contributions from the recent acquisition and a challenging marketplace at retail. On the acquisition front, the Company continues to see progress integrating operations, has begun limited production at the Fresh Kitchen facility, and remains confident about the ultimate growth potential and long-term vision for this business and its ready-to-eat categories. The performance of these operations, however, is currently not anticipated to meet original expectations for the current fiscal year but is projected to be accretive in fiscal 2018. To address the challenging retail landscape, the Company is continuing to invest in its store base, personalized marketing initiatives, customer convenience and experience, and the launch of its Our Family® brand into the Michigan region, which will provide the Company with a high quality, company-wide private brand program. For the military segment, the recently secured new business, together with increasing contributions from the DeCA private brand program, are expected to grow military’s sales and earnings in the second half of the fiscal year.

The Company continues to expect an easing of deflationary pressures with modest food inflation anticipated in the second half of the year. Accordingly, and depending on the variability associated with inflation by commodity and its related impact on LIFO, the Company does not expect the prior year deflation-related LIFO benefit of $0.07 per diluted share to repeat in the fourth quarter of fiscal 2017.

Due to changes in the timing of capital projects and several emerging long-term growth opportunities materializing more quickly than anticipated, the Company now expects capital expenditures for fiscal year 2017 to be in the range of $75.0 million to $78.0 million, depreciation and amortization to be approximately $83.0 million to $85.0 million, and total interest expense to be in the range of $23.0 million to $25.0 million.

For earnings history and earnings-related data on SpartanNash (SPTN) click here.