WASHINGTON -- Supermarket industry profits dropped slightly in the 1998-99 fiscal year -- falling to 1.03% from the prior year's record high of 1.22% -- according to Food Marketing Institute's Annual Financial Review.
lt of advances in technology, cost reductions and improvements in operating efficiency. The performance was especially significant, it said, "because of the substantial investments in property and equipment during this period, (with) such expenditures contributing to mixed results in certain financial ratios, especially for larger companies."
The review's other findings included the following:
Operating income rose to 3.03% of sales, just below the record high of 3.05% reported in 1995-96.
Interest expense rose to 1.04% from last year's 0.99% and was a factor in lower profit levels.
Return on assets continued to fall, hitting 3.27% compared with 3.64% in 1998 as the growth in asset base again outpaced sales, as in previous years.
Inventory rose to 23.48% of total assets after falling last year, while gross margin return on investment stayed fairly steady at 462%.
Capital expenditures declined to 2.6% of sales, while the percentage of assets in property and equipment fell to 44.92% of total assets -- the first decline in 10 years.
Cash flow remained healthy, with cash on hand growing 29.7%, compared to 9.17% a year ago -- the third consecutive year of increased industry cash flow.