Publix Profits Fall 19% in Quarter 3

LAKELAND | Publix Super Markets Inc. profits fell nearly 19 percent in the third quarter to $201.8 million as a weak U.S. economy weighed on consumers and retailers.

Sales for the Lakeland-based supermarket chain rose 3.7 percent on the year to $5.8 billion, though same-store sales inched up just 1.2 percent, Publix announced Monday. Earnings compared with $249 million the year prior.

"In these tough times, our costs are continuing to rise while many customers are struggling to make ends meet. So our results and stock price were significantly affected by this difficult operating environment," said Ed Crenshaw, Publix's chief executive officer, in a prepared statement.

Earnings per share came to 25 cents, down from 30 cents the year before. Publix's independently evaluated stock (sold only to employees and board members) is now trading at $17.90 per share, down from $19.70 in August.

Jon Springer, an associate editor with trade publication Supermarket News, said Publix's slipping profits indicate the company is trying to hold the line on pricing.

"When you see sales improve and earnings not keeping pace, it's possible Publix is eating some of their cost increases instead of passing them on to shoppers. They're not raising prices as quickly as their costs are increasing," Springer said.

In recent months, Publix has cut prices on staple items and ramped up promotion of special offers as discount-minded competitors such as Wal-Mart gather steam.

Retail industry consultant Burt P. Flickinger III also noted that Publix is particularly vulnerable to Florida's ailing economy, with 687 of the chain's 961 stores located here. Florida's housing collapse has ranked among the nation's worst, and unemployment levels currently exceed national averages.

"For Publix to produce a strong profit at 25 cents a share is superior to 95 percent of retailers across all sectors in North America," said Flickinger, managing director of New York-based Strategic Resource Group. "It was a relatively good quarter considering the economic times."

Publix's competitors had mixed results in their most recent quarters.

Last week, Jacksonville-based Winn-Dixie announced a loss of $2.3 million in its fiscal first quarter although sales rose 3.4 percent to $1.7 billion.

In September, Cincinnati-based Kroger Co. reported a profit of $276.5 million in its second quarter, marking a gain of 3.4 percent as sales climbed 11.9 percent to $18.1 billion.

Wal-Mart had record earnings of $3.4 billion in its fiscal second quarter, up 9.3 percent from the year prior, the company announced in August. The chain's U.S. sales were up 8.5 percent to $64.1 billion. Wal-Mart's grocery sales are not separated from its other divisions.

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