UPDATED: Nash Finch shares bounce back - The Packer

UPDATED: Nash Finch shares bounce back

01/19/2010 01:22:03 PM
Bruce Blythe

(UPDATED COVERAGE, 6 p.m.) Shares of Nash Finch Co., a food distributor and retailer, bounced back today after a 7% plunge Jan. 15 triggered by news the company may take a charge of as much as $69.9 million on its 2009 balance sheet.

Nash Finch expects a “significant portion” of the $69.9 million in goodwill for its retail segment will be written off, the company said in a Jan. 15 statement. Fourth-quarter sales were “soft” compared to the same period a year earlier, the Eden Prairie, Minn.-based company said in the statement.

Food retailers such as Nash Finch have been under pressure over the past year as the recession cut sales and Wal-Mart Stores Inc. ramped up discounts to lure price-conscious consumers.

“There’s increasingly strong price competition,” said Mario Barraza, an analyst with Kevin Dann & Partners, LLC, a New York-based research firm. “You have Wal-Mart advertising Dollar Days on TV. Retailers are competing for foot traffic. There’s not a lot of loyalty” among consumers.

Falling prices for milk and other goods are also squeezing margins for food retailers, Barrazo said.

“Supermarkets have to pass down those lower prices,” Barrazo said. “Supermarkets across the board have all taken price cuts this year. There’s a whole mix of things that are not working in their favor.”

Nash Finch spokesman Brian Numainville declined to comment.

Shares of Nash Finch, which operates Econofoods, Family Thrift Center and Sun Market grocery stores, gained 44 cents, or 1.3%, to $35.46. The stock is still down 16% over the past 12 months.

Companies typically make write-downs when the value of a previously acquired asset declines and the reduced valuation needs to be reflected on the company’s balance sheet.

In the Jan. 15 statement, Nash Finch also said its consolidated earnings before interest, taxes, depreciation and amortization for the 2009 fourth quarter will be below the same period a year earlier.

In the third quarter of 2009, Nash Finch posted net earnings of $21.9 million, up from $7.7 million in the same period of 2008. Third-quarter revenue was $1.63 billion, up 15% from a year earlier.

In the third quarter of 2009, Nash Finch posted net earnings of $21.9 million, up from $7.7 million in the same period of 2008. Third-quarter revenue was $1.63 billion, up 15% from a year earlier.

Nash Finch’s military food distribution unit drove much of the quarter’s profit and revenue gains.

Third-quarter sales in the company’s retail and food distribution businesses fell 4.4% and 2.6%, respectively, compared to the year-earlier quarter. The military unit’s sales surged 63%, fueled by the purchase of three GSC Enterprises distribution centers in January 2009.



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