SpartanNash Announces Preliminary First Quarter 2019 Net Sales and Earnings Results

SpartanNash Company (“SpartanNash” or the “Company”) (Nasdaq: SPTN)
today provided preliminary net sales and earnings results for the
16-week first quarter ended April 20, 2019. The Company also updated its
outlook for the fiscal year ending December 28, 2019.

David Staples, SpartanNash’s President and Chief Executive Officer,
commented, “We remain focused on achieving our top five objectives for
2019: 1) growing sales in the mid-single digit range; 2) realizing an
annual run rate of at least $15 million of earnings improvements through
Project One Team over 24 months; 3) strengthening our management team,
systems, food processing and supply chain operations; 4) reducing debt
and working capital while lowering financial leverage ratios; and 5)
improving adjusted operating earnings and EBITDA.”

Mr. Staples continued, “While we made significant progress against our
strategic objectives, challenges in the supply chain, fresh kitchen and
retail operations did not allow us to convert our top line success to
the bottom line. This, along with the ongoing voluntary recall at our
fresh cut fruit operations caused us to fall short of our original
financial expectations in the first quarter and will impact our fiscal
year 2019 outlook. We continue to be pleased with our sales growth and
ability to attract new business at our fresh kitchen operations. Our
team remains focused on deploying strategies to generate profitability
from this growth, despite the historically tight labor markets and
higher cost of transportation. As previously announced in April, we
initiated a voluntary recall of certain fresh cut melon products, and we
suspended production of all fresh cut fruit items for approximately two
weeks. We have resumed production of non-melon products and hope to
begin watermelon processing in the next week, with cantaloupe and
honeydew to follow, returning us to full production. Food safety is of
paramount concern to us and we will always strive to do what is best for
our customers. While we suspended production, our team and other outside
parties conducted extensive testing; not a single test result was
positive for contamination in our products or at our facility. Finally,
in our retail operations, we continue to navigate a tough environment,
which was compounded in the last period of the quarter by the
significant shifts in the timing of government SNAP benefit payments and
the Easter holiday.”

“Our team remains committed to improving our operational execution and
financial results as we begin the implementation of initiatives in
connection with our company-wide program, Project One Team, and we
continue to build out our supply chain leadership,” added Mr. Staples.
“Project One Team has exceeded our initial expectations and we now
estimate the initiative will result in more than $20 million in annual
run rate efficiencies and cost reductions when fully implemented over
the next 24 months. Additionally, we have made key leadership changes
across our organization and engaged a team of outside production experts
for our fresh kitchen to improve our execution and best position us for
sustainable improvements in our business for the remainder of 2019 and
into the future. As we look to the remainder of the fiscal year, we
believe our comparisons to the prior year will improve sequentially each
quarter.”

Strategic Business Objectives

As outlined in its fourth quarter earnings release and discussed above,
the Company has defined its top five objectives for 2019. These
objectives remain critical in the context of the Company’s long-term
strategy to evolve into a company with a national, highly efficient
distribution platform that services a diverse customer base through its
three highly complementary business units of Food Distribution, Military
Distribution and Retail.

The following summarizes these objectives and the Company’s progress
during the first quarter of 2019:

Achieve Mid-Single Digit Sales Growth. The Company advanced this
objective in the first quarter, realizing over 6% sales growth compared
to the same quarter in the prior year. This growth was bolstered by
contributions from the newly acquired Martin’s business in the Retail
segment, as well as growth in both the Food Distribution and Military
segments. Before the intercompany elimination of Martin’s sales, the
Food Distribution segment realized growth of 5.2%.

Realize an annual run rate of at least $15.0 Million of Savings Over
the Next 24 Months from Project One Team. The Company has exceeded
its objective by identifying over $20.0 million in savings
opportunities, which the Company expects to achieve in its run rate over
the next 24 months. The effect of implementing these opportunities is
not currently expected to be material to earnings in 2019.

Strengthen Management Team, Systems and Supply Chain Operations.
During the first quarter, the Company appointed a new Chief
Merchandising and Marketing Officer, Chief Information Officer and
several other key additions throughout the IT and supply chain
operations. Other strategic additions to the management team at various
levels are in process. The Company continues to invest in enhancements
to its systems and supply chain operations, however some improvements
are developing more slowly than initially expected, partly due to the
competitive employment environment in both warehousing and
transportation.

Reduce Debt and Working Capital While Lowering Financial Leverage
Ratios. Adjusted for the funding of the Martin Supermarkets’
acquisition, the Company paid down over $20.0 million in debt in the
first quarter of fiscal 2019. The Company also reduced its inventory
levels by over 2% from the first quarter of fiscal 2018, without
negatively impacting customer service levels, despite continued sales
growth. The Company will continue to focus on debt and working capital
improvements for the remainder of fiscal 2019.

Improve Adjusted Operating Earnings and Adjusted EBITDA Growth. First
quarter of fiscal 2019 profitability was significantly below the
Company’s expectations due to the factors mentioned above. The Company
is focused on achieving growth in its financial performance through
initiatives aligned with the organization’s overall strategy, which
include the strategic objectives noted previously. In addition to the
items above, the Company is in the process of executing strategic
investments in the Retail segment in connection with the implementation
of the Company’s new retail brand positioning. The Company expects to
begin realizing the benefit of these investments in the second half of
2019.

Fiscal 2019 First Quarter and Full Year Outlook

The Company expects net sales for the 16-week first quarter ended April
20, 2019 to be $2.54 billion compared to net sales of $2.39 billion for
the first quarter of fiscal 2018. For the 2019 first quarter and fiscal
year the Company now expects the following:

		Previous Guidance		Preliminary Results
		First Quarter		First Quarter
		Ended April 20, 2019		Ended April 20, 2019
Adjusted EPS from Continuing Operations		$0.33 – $0.37		$0.23 – $0.24
Reported EPS from Continuing Operations		N/A		$0.20 – $0.21
Adjusted EBITDA		N/A		$54 – $55 million
		Previous Guidance		Updated Guidance
		Fiscal Year		Fiscal Year
		Ending December 28, 2019		Ending December 28, 2019
Net Sales Growth		Mid-single digits		Mid-single digits
Adjusted EBITDA		$210 – $220 million		$190 – $205 million
Adjusted EPS from Continuing Operations		$1.70 – $1.80		$1.20 – $1.50
Reported EPS from Continuing Operations		$1.27 – $1.44		$0.70 – $1.04

The Company’s adjusted earnings per diluted share for the remainder of
the fiscal year exclude a charge to terminate the Company’s frozen
pension plan of $15.5 million to $16.5 million, with full fiscal year
adjustments totaling $16.5 million to $18.5 million after tax. The
financial update provided today is an estimate based on information
available to management as of the date of this release and is subject to
further changes upon completion of the Company’s standard quarter end
closing procedures. This update does not present all necessary
information for an understanding of SpartanNash’s financial condition as
of April 20, 2019, nor its results of operations for the quarter then
ended. A quantitative reconciliation of non-GAAP adjusted earnings per
diluted share for the first quarter and full fiscal year 2019 will be
provided as part of the Company’s full first quarter financial results.

The Company does not plan to provide preliminary financial results in
the future other than in unique circumstances, or in the event of a
material event that requires disclosure. The Company will report full
first quarter financial results on Monday, May 20, 2019 before the
market opens and host a conference call to discuss its results on
Monday, May 20, 2019 at 8:00 a.m. ET.

About SpartanNash

SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core
businesses include distributing grocery products to a diverse group of
independent and chain retailers, its corporate-owned retail stores and
U.S. military commissaries and exchanges; as well as premier fresh
produce distribution and fresh food processing. SpartanNash serves
customer locations in all 50 states and the District of Columbia,
Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt. SpartanNash
currently operates 161 supermarkets, primarily under the banners of Family
Fare Supermarkets, Martin’s Super Markets, D&W Fresh Market,
VG’s Grocery, Dan’s Supermarket and Family Fresh Market.
Through its MDV military division, SpartanNash is a leading distributor
of grocery products to U.S. military commissaries.

Forward-Looking Statements

This press release contains “forward-looking” statements within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934. These include statements preceded
by, followed by or that otherwise include the words “outlook,”
“believe,” “anticipates,” “continue,” “expects,” “guidance,” “trend,”
“on track,” “encouraged” or “plan” or similar expressions. The
statements in this press release are inherently forward looking.
Forward-looking statements relating to expectations about future results
or events are based upon information available to SpartanNash as of
today’s date, and are not guarantees of the future performance of the
Company, and actual results may vary materially from the results and
expectations discussed. Additional risks and uncertainties include, but
are not limited to, the Company’s ability to compete in the highly
competitive grocery distribution, retail grocery, and military
distribution industries. Additional information concerning these and
other risks is contained in SpartanNash’s most recently filed Annual
Report on Form 10-K, recent Current Reports on Form 8-K and other SEC
filings. All subsequent written and oral forward-looking statements
concerning SpartanNash, or other matters and attributable to SpartanNash
or any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements above. SpartanNash does not
undertake any obligation to publicly update any of these forward-looking
statements to reflect events or circumstances that may arise after the
date hereof.

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Investor Contacts:
Mark Shamber
Chief Financial Officer
and Executive Vice President
(616) 878-8023

Katie Turner
Partner, ICR
(646) 277-1228

Media Contact:
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Vice President Corporate
Affairs and Communications
(616) 878-2830