Smart & Final Stores, Inc. (SFS) saw its loss widen to $4.59 million, or $0.06 a share for the quarter ended Mar. 26, 2017. In the previous year period, the company reported a loss of $1.64 million, or $0.02 a share. On an adjusted basis, net loss for the quarter stood at $1.52 million, or $0.02 a share compared with a net profit of $6.63 million, or $0.08 a share in the last year period.

Revenue during the quarter grew 6.45 percent to $967.02 million from $908.45 million in the previous year period. Gross margin for the quarter contracted 36 basis points over the previous year period to 13.77 percent. Operating margin for the quarter stood at negative 0.27 percent as compared to a positive 0.36 percent for the previous year period.

Operating loss for the quarter was $2.56 million, compared with an operating income of $3.27 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $24.41 million compared with $35.04 million in the prior year period. At the same time, adjusted EBITDA margin contracted 133 basis points in the quarter to 2.52 percent from 3.86 percent in the last year period.

"The operating environment in the first quarter remained challenging, with lingering effects of deflation and cannibalization weighing on our sales performance and results of operations," said David Hirz, president and chief executive officer. "Our ability to deliver first quarter net sales growth of 6% year-over-year, despite market conditions and severe weather in our market areas, highlights the effectiveness of our differentiated model, as a one-stop shop for our household and business customers, and our unique product assortment of private label, club sizes and high quality perishables."

For the financial year 2017, Smart & Final Stores forecasts revenue to grow in the range of 5.50 percent to 6.50 percent. The company expects adjusted net income to be in the range of $39 million to $43 million.  The company expects diluted earnings per share to be in the range of $0.50 to $0.55 on adjusted basis.

The company has spent $27.36 million cash to meet investing activities during the quarter as against cash outgo of $30.54 million in the last year period. It has incurred net capital expenditure of $27.31 million on net basis during the quarter, down 4.27 percent or $1.22 million from year ago period.

Cash flow from financing activities was $2.20 million for the quarter, down 90 percent or $19.83 million, when compared with the last year period.

Cash and cash equivalents stood at $50.38 million as on Mar. 26, 2017, down 20.12 percent or $12.69 million from $63.07 million on Mar. 27, 2016.

Working capital drops significantly
Smart & Final Stores, Inc. has witnessed a decline in the working capital over the last year. It stood at $1.07 million as at Mar. 26, 2017, down 97.09 percent or $35.76 million from $36.83 million on Mar. 27, 2016. Current ratio was at 1 as on Mar. 26, 2017, down from 1.11 on Mar. 27, 2016.

Cash conversion cycle (CCC) has decreased to 5 days for the quarter from 7 days for the last year period. Days sales outstanding were almost stable at 2 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 13 days for the quarter compared with 25 days for the previous year period. At the same time, days payable outstanding was almost stable at 21 days for the quarter, when compared with the previous year period.