Independents Eke Out Profit Gains

supermarketnews.com DATAPOINTS October 8 & 15, 2012 INDEPENDENTS EKE OUT PROFIT GAINS ARLINGTON, Va. – The independent sector saw average net profits before taxes rise to 1.12% in 2011, compared with 1.08% in 2010 – a gain of 3.7% – according to the 2012 Independent Grocers Financial Survey from the National Grocers Association here and FMS Solutions, Baltimore. Independents also saw same-store sales rise 2.6% last year, although after adjusting for food-at-home inflation of 4.8%, comps actually were down 2.2%, the survey indicated. Total store gross margin increased 65 basis points to 26.33%, compared with 25.68% in 2010. According to Robert Graybill, president and chief executive officer of FMS, "The profit leaders have developed a formula for success by gaining a close understanding of their local market, controlling expenses and growing margins. By solid management decisions in good economic years, they managed to grow profits even further despite the difficult business environment." SOURCE: 2012 Independent Grocers Financial Survey Fewer Independents Close Stores (% of respondents who closed stores) Coping with Health Care Costs 47.3% 2011 2% Absorbed cost increases (of the 78% who reported 2010 20% cost increases) 44.4% Passed on some increases Fewer Open Stores (% of respondents who opened stores) 8.3% Passed on all increases 2011 9.1% 2010 16% Inflation Drives Gains 3.7% % of independents that had negative same-store sales in 2011, when adjusted for inflation Fewer Remodels (% of respondents who remodeled stores) Increase in 2011 7.5% net income for % of independents that had negative same-store sales in 2010, when adjusted for inflation independents in 2010 18.8% 2011 "Economic, market and shopper challenges are demanding that grocery retailers seek new ways to grow sales and profits and find further efficiencies in their businesses." - PETER J. LARKIN, NGA president and CEO 8.6% Health care costs as a percentage of sales increased an average of 1.5% last year. Percentage of respondents who said they reduced health plan befits in 2011 2.6% Shoplifting Increases in 2011 Shoplifting: 60% • Employee Theft: 56% Increase in same- store sales in 2011, unadjusted for (% of respondents who said shoplifting increased in 2011) inflation 72.7% 43.2%