SpartanNash Co. shares SPTN, -5.02% fell about 6% Monday, after the distributor of grocery products to chain retailers said its chief executive is leaving and announced a decision to exit its Fresh Kitchen operations. The Grand Rapids, Mich.-based company, which also supplies military commissaries and exchanges, said it has appointed Dennis Eidson as interim CEO until it has identified a replacement for Dave Staples, whi is leaving the company and board. Eidson was CEO from 2008 to 2017 and also served as chief operating officer during his 16-year tenure at the company. The company said it decided to ditch its Indianopolis-based Fresh Kitchen operations to improve operating earnings and EBITDA, or earnings before interest, taxes, depreciation and amortization. The Fresh Kitchen was acquired in 2018 as part of the deal to buy Caito Foods. The exit is expected to shave about $20 million off annual sales. The company said it now expects second-quarter sales of $2 billion, up from $1.9 billion a year ago. It expects a net loss from continuing operations of $6.9 million, or 19 cents a share, and an adjusted EPS of 34 cents, matching the FactSet consensus. BMO analyst Kelly Bania said the decision to exit Fresh Kitchen "may be a positive going forward given expected losses with this business." Overall, however, "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," Bania wrote in a note to clients. BMO rates the stock as underperform with an $8 price target that is about 16% below its current trading level. Shares have fallen 45% in 2019, while the S&P 500 SPX, -1.43% has gained 15%.
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