SpartanNash Company (NASDAQ:SPTN) Q4 2023 Earnings Call Transcript

Andrew Wolf: Okay. And lastly for me is on the retail business, did fuel deflation — or do you sell — was it deflation? Or did you sell less gallons? And just what impact did the fuel — the lower fuel sales have on the Retail segment sales? So we can look at it sort of on a grocery basis?

Jason Monaco: Great question, Andrew. So, two things. On the top line it was about a $20 million drag in lower fuel sales. And the lower margins, so what we saw were lower margins as we lapped unusually high fuel margins in Q4 2022. The impact of that was about $4 million on the bottom line. So when you think about our results, we delivered a 6% adjusted EBITDA growth year-over-year, and that was in the face of lapping a $4 million step down in fuel margins in the quarter.

Andrew Wolf: Got it. All right. Thank you. Appreciate it.

Operator: [Operator Instructions] And our next question comes from Alex Slagle from Jefferies. Your line is open.

Alex Slagle: Thanks. Good morning guys. Couple of questions. High-level inflation expectations baked into your guidance for next year and just any general views on the level of expected supplier promo activity? And any thoughts on just the Amazon Fresh business what you’re kind of baking in when you think about those plans?

Tony Sarsam : Yes. So a couple of things. So inflation we see inflation continuing to stabilize getting back to kind of normal range of inflation that we may have seen a couple of years back or three years back, I guess. I guess following on a couple, I’ll turn it over to Jason for a second here for a little bit more color on that. But the Amazon business just to build on that again, I think, they’re — again, as I mentioned, they’re finding their way to the right place in their business. We are supporting them as they kind of design what’s going to be best for them and for their consumers. They have continued to rightsize that business and we saw more of that in the fourth quarter as they continue to pull back and figure out what they’re going to do next there.

Jason Monaco : Yes. Maybe one more comment on the outlook for inflation. We’ve projected or incorporated about a 1% food inflation assumption in the plan going forward. We think that that’s a — that modest outlook is reflective of where we’re at. Obviously, nobody can perfectly predict the future. But we finished 2023, it kind of consistent with what you see externally sub-3% inflation levels in both our Retail and Wholesale businesses. And we expect that to continue to wind down into 2024.

Alex Slagle: Great. And then on new and lapsed customers joining and partnering with your Wholesale business, any views on what that pipeline looks like? Where you’re seeing momentum building the most?

Tony Sarsam: Sure. Yes. We have a pretty active engagement with a number of folks out there. As you know these relationships are often long and sticky. And we believe we have a great offering for — obviously for our current customer set, but we’re seeing good enthusiasm for what we bring to the marketplace. We have great services that we bring to our independent customers. We are refining the types of things that we offer them. And we have great people in the field. So Amy is just getting started with her role on that and kind of reshaping how we get more aggressive on the things that we can bring to bear. And so far the reception has been very good. So we are very bullish on being able to bring more folks into the fold with again with the service and the fine people we have out there servicing those customers.

Alex Slagle: All right. And one more actually, just sounds like good momentum on just reducing turnover and sound like you accelerated in the back half. And then, how much more room to go there and just sort of what the opportunity looks like to get beyond historical levels of turnover and overtime?

Tony Sarsam: Yes. So we had a really good year last year overall on retention. A lot of focus as I mentioned in my earlier comments, the process of putting people first and really focusing on how you get folks engaged in the business and understanding and excited about our goals and the work we’ve done to sort of recognize and reward those achievements have come a long way. Our retention rates are better overall. They got much better in the early phases and that’s when people are sort of experimenting and trying to learn about their careers. So we see really, really great momentum on overall turnover. And is that sort of veins and obviously to your second part of your question, we see better performance on overtime as well. So we have — I think we have better stability, better schedules for folks. And it’s a great virtuous cycle, when you get that going in the right direction. So we feel great that we’re doing right now on overall on the people front.