SpartanNash Company (NASDAQ:SPTN) shares have fallen 4.5% today following the resignation of CEO Dave Staples. Dennis Eidson, SpartanNash Chairman and CEO prior to Mr. Staples, will resume the role on an interim basis. SPTN stock currently sits just $0.50 off its year low of $9.00.
Disappointing Results Cause SPTN Stock to Tumble
Mr. Staples decision to resign from the grocery retailer comes after disappointing financial results in 2019 caused SPTN stock to tumble more than 56% from a year high of $21.64 in February to as low as $9.40 on August 2. Today’s announcement was also coupled with the company’s decision to withdraw from its Fresh Kitchen operations, a facility that cooks and packages fresh protein-based foods and that was acquired as part of SpartanNash’s takeover of Cairo Foods in 2017. SpartanNash estimated the annual net sales impact of exiting the Fresh Kitchen operations to be about $20 million.
SpartanNash’s preliminary Q2 results show net sales of $2 billion USD, which is up from $1.9 billion USD for the same period last year. However, the company expects a net loss of $6.9 million USD from continuing operations. This, along with the $20 million USD earnings loss from Fresh Kitchen, has not filled investors in SPTN stock with a great deal of confidence as many speculators see a difficult future ahead for small- to medium-sized grocery retailers.
Mr. Staples was instrumental in the Spartan Stores merger with Nash Finch in 2013 and the company’s acquisition of Caita Foods in 2016, but his two-year stint as CEO was marked by several struggles and controversies that saw wild fluctuations in SPTN stock, including the closure of the company’s Fresh Kitchen facility for two weeks in April after the FDA issued a salmonella warning on fresh-cut watermelon. The loss of Fresh Kitchen comes during a time when prepackaged meals have become a sales driver for grocers.
What do the Analysts Think?
BMO analyst Kelly Bania said, “while today’s actions may improve the ability of SPTN to execute over time, the announcements today do not yet reflect the external top-line pressures that we believe small and mid-sized grocery retailers are likely to face in the coming years.”
BMO rates SPTN stock as underperforming, giving it an $8 price target that is about 16% below its current trading level.
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