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

Scott Mushkin: Does that mean you’re a little bit below your plan, or is it — what’s the reason for it to be coming in better on the variable?

Jason Monaco: Yes. It’s both a combination of last year being above and this year being a little bit below plan.

Operator: Our next question comes from Kelly Bania with BMO Capital Markets.

Benjamin Wood: This is Ben on for Kelly. Thank you for taking our questions. Just hoping you could provide a little more clarity around a couple of comments to start. The demand changes from Amazon, what generally is your visibility or lead time to those changes? And then how does Amazon fit into your long-term sales guide? Trying to determine how you’re thinking about the risk going forward, or is there upside to fresh agreement.

Tony Sarsam: Yes. So, the — as far as lead time goes, we work pretty closely with Amazon to get a forecast of their business. They are as — the best we can determine, they’re learning about what — what’s going on with them, what plans they have to make. So it’s not an extraordinary lead time. So, we have — but we have great tools in place to make sure that between us that we get the product right with them, and we have a way of servicing them and getting the fill rate right and not obviously getting in a situation where you have too much inventory. So, I think all those things work well between us and Amazon as we’re sort of learning together on their business. They’re — Amazon is a great customer. And so we’re going to continue to work with them to make sure their business can — that we could be a productive part of their business and their business plans.

As they’ve announced recently, their business plan is a little bit in flux. So they’ve also doubled down and so they want to make sure that they are going to be a player in grocery, and we’re going to be a great partner for them in their journey.

Benjamin Wood: Okay. That’s helpful. And then on the refreshed go-to-market strategy, what drove the decision behind that? And where should we expect to see that kind of in the P&L? And then just a clarity on that $20 million of cost savings. Was that in the previous plan or is that incremental to the $20 million to $30 million of supply chain benefits that I think you guys outlined maybe last quarter?

Tony Sarsam: Yes. So, I’ll have a question. So first of all, the overall strategy we’ve been working for quite a while, and it’s a combination, as mentioned earlier, of taking a look at some of the ways we were structured in the wake of some M&A activity where from the past where we had an opportunity to sort of combine forces and some functions and make them more efficient and more effective. And largely with an exercise in getting our organization streamlined so that we could be really laser-focused on serving our customers. And that’s why the focus, as we mentioned earlier, was so heavily on go-to-market. We want to make sure that with the folks who are serving our customers in all ways, are part of that customer team, our sales organization.

And so, we have simplified the points of contact with our customers. And we think that’s going to really, really work well for us as we get information passed along more efficiently, and we get — again, we find ways to actually serve and provide great innovation for our customers moving forward. So, it was both an element of sort of rightsizing with some of — from previous M&A as well as really thinking through the entirety of the go-to-market team between sales and merchandising and marketing and retail, make sure that’s right for the kind of growth we expect to get from that — from the overall organization. And as far as the savings, it was fully contemplated in the previous long-range plan that we talked about. So, it wasn’t discretely part of the supply chain, a necessarily a transformation, but it was part of the overall build for our 2025 plan to $300 million.