Dive Brief:

• SpartanNash generated comparable-store sales growth of 3.9% during the second quarter of fiscal 2023, a figure that was down for the third quarter in a row, the grocery distributor and supermarket operator reported Thursday.
• Net sales ticked up 1.7% year over year in Q2, to $2.31 billion, while net earnings nearly quadrupled to $19.5 million, reversing the double-digit slide in that metric SpartanNash posted for Q1.
• SpartanNash’s results during its most recent quarter were affected by factors including rapidly declining inflation and reduced demand from Amazon, one of the company’s key wholesale customers.

Dive Insight:

Price increases continued to positively impact SpartanNash’s financial performance during the second quarter, but the company has seen those benefits moderate as inflation ebbs more quickly than it had expected, Chief Financial Officer Jason Monaco said Thursday during an earnings call.

Inflation fell in Q2 to a level SpartanNash had figured it would reach during the third quarter, and the company believes the rate of price growth will continue to decline as the year plays out, Monaco said.

“[W]e’re seeing the pace of price increases slow, and we’re seeing that price pass through to our customers as we provide as compelling an offer to our shoppers and our customers as possible to help drive volume and performance in our stores and our [customer’s] stores,” he said.

The company reduced its projection for net sales during the current fiscal year to a range of $9.65 billion to $9.95 billion, down from its earlier guidance of $9.9 billion to $10.2 billion.

SpartanNash saw basket sizes and foot traffic in its stores grow during Q2 even as inflation dropped, Monaco said.

Monaco said SpartanNash also faced challenges during the quarter related to recent efforts by Amazon to revamp its grocery operations. SpartanNash has taken steps to support Amazon as that company looks to accelerate its position as a food retailer, and factored the impact Amazon’s moves will have on SpartanNash’s run rate into its projections, he said.

SpartanNash President and CEO Tony Sarsam emphasized during the earnings call that the company views Amazon as a key customer.

“[W]e’re going to continue to work with them to make sure … that we could be a productive part of their business and their business plans,” Sarsam said. “They want to make sure that they are going to be a player in grocery, and we're going to be a great partner for them in their journey.”

Sarsam added that SpartanNash’s decision to consolidate its banners has been paying dividends for the grocer, with sales at stores it has rebranded or remodeled up by double digits. The company, which operates nearly 150 supermarkets under banners including Family Fare, Martin’s Super Markets and D&W Fresh Market, is “on target” toward remodeling or refreshing 25% of its stores, Sarsam said.