Publix Profits Down for Second Quarter

LAKELAND | Publix Super Markets Inc. felt the economic pinch in its second quarter as profits declined 3.5 percent from a year ago to $295.8 million, the company announced today.

Sales for the Lakeland-based company grew 3.5 percent to $5.9 billion, while same-store sales were up just 1.3 percent.

"When you subtract out inflation that's not a very good number because that means their same-store sales without inflation were probably negative," said Mark Hamstra, retail editor of the Supermarket News trade publication. "There's also been a lot of people trading down within supermarkets I think, buying less expensive products and more private label products ... maybe they're seeing some customers going to Wal-Mart or other alternatives in their market."

Publix's second quarter earnings per share were unchanged at 36 cents. The company's stock, which is sold only to employees and board members, is now priced at $19.70 per share, up 25 cents from its last valuation in May.

The stock price is based on independent appraisals and Publix officials do not discuss the methodology.

Spokeswoman Maria Brous said Publix is operating in a difficult economic environment.

"We're in the same economic (climate) as everyone else. We experience an increase in fuel costs and raw commodities pricing," Brous said. "We continue to look for ways to grow our business in a pretty stagnant market."

Publix's competitors have had varying levels of success in recent months. Wal-Mart, second to Publix in Florida market share, in May reported record earnings and sales for its fiscal first quarter, buoyed by steep discount pricing.

In late June, Kroger Co., a large Publix competitor in Georgia, said profits rose 15 percent during its first quarter, beating analysts' expectations. Officials said the results were helped by pharmacy and gas discount programs for on-site gas stations, in addition to gift card bonuses for shoppers with economic stimulus checks.

On Friday, Jacksonville-based Winn Dixie announced preliminary results for its fiscal fourth quarter, reporting a loss of $5 million on income of $13 million.

Neil Stern, a principal with Chicago-based retail consulting firm McMillan Doolittle, said Wal-Mart and other discount chains have benefitted as cash-strapped consumers shop around for better deals.

Many grocers have likely been reluctant to pass on inflation costs to consumers for fear of losing them to cheaper chains, Stern said.

"While it's traditionally true that food is the last place consumers cut back, they can and sometimes do have to cut back when times get tough," he said. "I think that's reflected in a lot of people's numbers right now."

[ Kyle Kennedy can be reached at kyle.kennedy@theledger.com or 863-802-7584. ]