SpartanNash Company (NASDAQ:SPTN) Q2 2023 Earnings Call Transcript

Andrew Wolf: Okay, great. So the 1% — less than 1% down and the outperformance, I think in previous quarters coming into this quarter, you could say a lot of that was the military still doing better than the grocery side? Is that still the case, or is the core grocery side in any way kind of improving sequentially?

Jason Monaco: Yes, I’d characterize it as similar trends to what we’ve seen in the past. With our military business, we saw a slight deceleration in the growth profile, particularly related to the export portion of that business as the demand is repositioned globally. And then on the rest of the Wholesale business, we’ve seen a stabilization of our independents. And we’ve continued to work from our standpoint, we see ourselves as a food solutions company, and we work closely with our customers to leverage the strength of our own retail experiences to drive growth through that channel and to work together with those customers to help them win. And we’ve seen that start to pay off along the way.

Andrew Wolf: Okay. Just one more on the Wholesale business. And I might have missed this, so — but did — are you — is this the toughest quarter for year ago comparisons, or are we in that period? Like when does that sort of begin to cycle off with the holding gains from a year ago when inflation was still accelerating?

Jason Monaco: Yes. Great question. So, they’re all — naturally, they’re all tough quarters because we had a record performance last year, and we expect to continue to build on that record going forward. So generally speaking, as we think about the price-related — inflation-related price change benefits from prior year, we had the biggest headwinds in Q1, and we expected a wind-down through the middle part of this year and winding down further in the fourth quarter. If I kind of step back and look at what we expected for inflation and how it’s played out, inflation rates have declined faster than we expected. We’ve seen what we thought would be coming probably in the later third quarter coming in through the second quarter. And so, from a comparable standpoint, we’re still facing significant headwinds in the second quarter. I expect more in the third and a wind-down in the fourth.

Andrew Wolf: One more question, if I could, it’s a follow-up on your answer on inflation. Is there any — if you look at Wholesale versus Retail since you’re in both segments. Is the disinflation in some items and deflation in commodities for chicken and other things, poultry, dairy, is that more helpful to retail because of sticky pricing? They might get a little better unit contribution in that transition phase, or could you give us a little sense of whether there’s the impact of slowing inflation and/or deflation has a different impact on your two segments?

Jason Monaco: Yes. From a demand standpoint, it hasn’t really changed. There isn’t really a big differential between the two segments from an inflationary standpoint. And inflation in general, as I look across both of our segments was pretty close. It was in the kind of high-7s, low-8s as we exited the quarter, and we’ve seen what you’ve seen in the public filings and public data, a wind down of inflation rates from the beginning of this year where we were sitting in the kind of low to mid-teens to the end of this quarter — at the end of last quarter where we were in the mid to high single digits. So, we’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 stores.