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Publix sees higher sales but lower net profits. Stock dividends fall

Publix sees higher sales but lower net profits.  Stock dividends fall

Publix’s stock price fell to $13.19 on Tuesday after snowy economic conditions cut net profit by 54% despite higher sales in the third quarter.

Publix Super Markets Inc. also paid a dividend of 9 cents per share on Tuesday.

The Lakeland-based grocer’s net profit fell even as same-store sales and overall sales rose, Publix said in a statement.

Publix and fellow grocery retailers like Kroger are reporting lower net profits based on recent filings.

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“Publix, like Kroger and maybe more so, is a high-end grocery chain,” said Valrie Chambers, a tax and accounting professor at Stetson University in DeLand. “Salaries have increased, but inflation, especially in some key foods, has increased more. What is a family to do?

“We shop at Publix less frequently, and we substitute Winn Dixie, Walmart, dollar stores and wholesale warehouses like BJ’s, Costco and Sams,” she said.

“We still shop at Publix, but the mix of store purchases has shifted to more affordable stores, which would generally hurt Publix’s bottom line.

“Today’s stock prices are buying potential future earnings, not just the past,” Chambers said. “Publix’s ability to continue to raise in-store prices to achieve the same profit increases as it has in the recent past may be dampened and reflected in muted grocer stock prices.”

Publix sees higher sales but lower net profits.  Stock dividends fall

The effect of inflation on food purchases

A recent survey by CouponBirds found that 45% of Florida adults said they would eat less food in 2022 due to inflated food prices (compared to a national average of 42%).

“We’ve been in a bear market for nine or 10 months, which means the market as a whole is down 20% or less,” said Joseph Fitter, a finance professor at Indiana University’s Kelley School of Business. “And so, you know, that means every company contributes to that downward spiral [trajectory] and therefore the food sector would not be compared to others.

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“As future earnings go up, you’d expect the stock price to go up. As future earnings go down, you’d expect the stock price to go down,” he said. “How much it can go up or down depends on the underlying interest rates, the cost of money.

On Wednesday, the Federal Reserve was expected to raise interest rates again in a bid to halt 40-year high inflation.

In May, the domestic food sector saw a 12% increase in food costs compared to May last year. From the 12 months starting in May 2021, the price of eggs increased by 32.2%; meat, poultry and fish increased by 14.2%, and dairy products by 11.8%.

Other factors that affect profitability are sales. They are one of the drivers of stock prices, especially for a company like Publix.

Grocery sales are determined by what consumers put in shopping carts, Fitter said. With inflation, consumers may be shopping less at the supermarket than they did six to 12 months ago, before inflation rates rose.

Last year, shoppers might have bought nicer cuts of meat or brand-name organic vegetables, but now they’re looking to store brands or generics to stretch household budgets, he said. This type of consumer behavior can reduce profit margins for grocers who are making more money from premium brands.

And while same-store sales may be higher for grocers, those sales aren’t keeping up with inflation, Fitter said.

“I mean, last month I sold 500,000 dollars in my store, this month I sold 600,000 dollars. But if inflation says the prices were higher and so I should have sold $700,000, that means consumers are probably going down,” he said.

There’s also often a lag between the rising costs of putting products on the shelves for a grocer and the amount consumers pay for the grocery cart, which reduces the company’s profitability, he said. Stores are hesitant to raise prices because that could drive customers away to lower-priced grocery stores. But eventually, they have to raise their prices, or they will lose money.

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“There are a lot of different dynamics in the market that can drive this profitability picture from a grocery standpoint,” Fitter said.

Expenses can also be a factor in profitability, including labor costs, utilities and the cost of renting retail space, he said. Fuel costs and the price of commodities such as wheat used to make bread have affected the price paid to put food on store shelves.

Publix stock is not publicly traded and is available only to current Publix members and its board of directors.

Third quarter, by the numbers

Publix said in a press release that sales for the three months ended Sept. 24 were $13 billion, up 9.2% from $11.9 billion in the same period in 2021. %

However, net income was $394.1 million, down 54% from $856.9 million a year ago.

Earnings per share for the quarter fell to 12 cents per share, down from 25 cents per share in 2021, adjusted for the impact of the April 14 to 5 stock split.

Excluding the impact of unrealized net gains and losses on equity securities, net income would have been $808.9 million, compared to $802.5 million in the same period a year ago, an increase of 0.8%.

An uninvested loss is the result of holding an asset that has fallen in price but has not yet been sold, according to Investopedia.com. Shareholders may, for example, do this to wait and see if the asset’s price will rise. Similarly, unearned profits are assets whose price has risen “on paper” and has not yet been sold. Asset sales are subject to capital gains tax.

Earnings per share would have been 24 cents per share, compared with 23 cents per share a year ago, adjusted for the impact of the stock split, Publix said.

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Pubix’s SEC filings also show year-over-year results from the third quarter. Food sales ended September 24 were $39.2 billion, up 10.7% from $35.4 billion in the same period in 2021. Comparable sales for the first nine months of the year were up 9%.

Net income for the nine months ended Sept. 24 was $1.6 trillion, down 51.2 percent from $3.4 trillion in 2021, Publix said.

Earnings per share for the nine months ended Sept. 24 fell to 48 cents per share, down from 97 cents per share in 2021, adjusted for the impact of the stock split.

Excluding the impact of unrealized net gains and losses on equity securities, net income for the nine months would have been $2.8 trillion, compared to $2.6 trillion in 2021, an increase of 4.7%. Earnings per share would have been $0.81 per share, compared to $0.76 per share a year ago, adjusted for the impact of the stock split.

Those amounts are based on unaudited financial statements Publix filed Tuesday with the U.S. Securities and Exchange Commission. The filings are available at corporate.publix.com/stock.

“Unfortunately, the stock market remains challenging, but I could not be more proud of Publix’s response to Hurricane Ian,” Publix CEO Todd Jones said in a company-prepared statement. “The efforts of our partners to serve our customers, our communities and each other during this difficult time have been amazing.”

Publix Super Markets Inc. It is the largest employee-owned company in the United States with 240,000 employees, its website said. The grocery chain has 1,311 stores in seven southeastern states, with stores under construction in an eighth state, Kentucky. .

Publix also operates 10 distribution centers, seven in Florida and one each in Alabama, Georgia and North Carolina. It has 10 manufacturing facilities in Georgia and Florida and 33 warehouses. As of 2019, it had more than 1,225 truck drivers and nine delivery locations in its seven-state operating area.

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