WASHINGTON -- Supermarket profit margins fell below 1% for the 12-month period ended in March, the first time in 10 years that the 1% threshold has been breached, according to a survey released last week by Food Marketing Institute here.
the recent range of 1.3%," said Tim Hammonds, president and chief executive officer, FMI.
Rising health care costs also affected profit margins, according to the survey, which included responses from 147 companies operating nearly 12,000 stores. Heath care costs ranked second as a key concern for operators, after competition.
Other findings from the survey were more encouraging. Operating income increased to a five-year high of 3.34% during the period, "reflecting disciplined and efficient management at the store level," Hammonds said.
Supermarkets also posted a 409% gross margin return on inventory, another five-year high. For retailers with sales below $100 million, GMROI increased to 530%, up from 470% the previous year.
