SpartanNash shakes up executive ranks
Grand Rapids, Mich.-based SpartanNash is going through an executive switcharoo following the resignation of President and CEO David M. Staples in the wake of the company’s disappointing financial performance.
The company announced that its board of directors has appointed Chairman Dennis Eidson to the additional roles of interim president and CEO, effective immediately. Eidson will hold these additional roles until SpartanNash’s next CEO is chosen. Eidson was CEO from 2008 to 2017, and before that, president, chief operating officer and executive vice president of marketing and merchandising, during his 16-year tenure with the company. Staples succeeded Eidson as CEO in 2017.
“The board remains confident in the company’s strategic direction and its ability to generate top-line growth; however, execution has fallen short of our expectations and we believe that now is the time for a leadership change,” said Douglas Hacker, lead independent director of the board. “I want to thank Dennis for returning to the leadership position to guide the company’s efforts in revitalizing performance and maximizing long-term shareholder value.”
Along with the preview of its quarterly results, SpartanNash revealed the decision to exit its Indianapolis-based Fresh Kitchen operations to boost operating earnings and EBITDA results within its food distribution segment. According to the company, it will shift its focus and expertise to its produce distribution and fresh-cut operations. The Fresh Kitchen, acquired in 2017 as part of SpartanNash’s purchase of Caito Foods, is a facility that cooks and packages fresh protein-based foods and complete meal solutions for various customers.
SpartanNash estimated the annual net sales impact of exiting the Fresh Kitchen operations to be about $20 million. Q2 preliminary earnings from continuing operations include about $14 million of asset impairment expenses associated with Caito’s fresh operations. The company anticipates the transition to be completed by the close of fiscal 2019.
SpartanNash’s preliminary results for the 12-week second quarter ended July 13, 2019 include net sales of $2 billion, compared with $1.90 billion for the year-ago period. Also for Q2 2019, the company’s reported loss from continuing operations was $6.8 million, reported EPS from continuing operations was a loss of 19 cents, adjusted earnings from continuing operations was $12.2 million, adjusted EPS from continuing operations was 34 cents and adjusted EBITDA was $44.3 million.
The company additionally downgraded its guidance for the fiscal year ending Dec. 28 to $183 million-$195 million for adjusted EBIDTA, $1.20-$135 for adjusted EPS from continuing operations, and 21 cents-47 cents for reported EPS from continuing operations, while still expecting net sales growth in the mid-single digits. The revised guidance doesn’t include costs associated with the CEO transition and costs from a nonrecurring, supplemental, transition incentive program for eligible employees.
The company will release its full Q2 2019 results Aug. 14.