Smart & Final Q3 Performance Pressured by Deflation

Smart & Final Stores posted overall growth in customer visits during its fiscal third quarter of 2016, but the effects of deflation and anticipated cannibalization continued to pressure the Commerce, Calif.-based regional retailer's same store sales during the period.

On its Q3 earnings call for the period ended Oct. 9, Smart & Final reported a net sales increase of 12 percent to $1,394.4 million, as well as a comp decrease of 1.3 percent. Net sales growth was driven by the net sales contribution of new stores, partially offset by the comps decrease.

"Year-to-date, we've opened 33 new Smart & Final Extra! and Cash & Carry banner stores and relocated six Smart & Final legacy to new Extra! store locations,” said David Hirz, president and CEO, Smart & Final. "With four additional new stores and six legacy-to-Extra! store conversions planned in the fourth quarter, we are on track to deliver by year-end 15 percent annual new unit growth in the Smart & Final banner, and above historical average growth in the Cash & Carry banner. We continue to build upon our differentiated brand message and support growth in our two strong, well-positioned store banners."

Hirz also added that he is pleased that Smart & Final’s merchandising and marketing initiatives are driving “broader exposure” to Smart & Final’s brands, products and service, and that his company will continue to focus on developing product categories with strong potential sales growth and a “robust” marketing program and digital campaign that will support store performance during the holiday season.