RETAILERS BEAT COSTS TO DRIVE PROFITS: FMI
ARLINGTON, Va. — Food retailers overcame sharp increases in energy, health care and other costs to post a median after-tax net profit of 1.91% in fiscal year 2006-2007, up from 1.46% the previous year, according to Food Marketing Institute's Annual Financial Review 2006-2007, released last week. The report, based on data from 109 companies representing 12,852 stores, showed that the smallest and largest companies reported strong bottom-line results. Retailers with annual sales under $100 million had a median net profit of 1.83%, and those with sales of $1 billion or more showed profits of 1.93%. Midsize retailers with sales in between did not fare as well, with profits of 1.1%. The report also showed that EBITDA increased to 4.8%, up from 4.29%, representing the highest mark in four years. “Retailers are serving consumers with the right mix of products, keeping items in stock and controlling inventories,” Tim Hammonds, president and chief executive officer of FMI, said in a statement.
KROGER ADDS SAFEWAY'S GIFT-CARD PROGRAM
PLEASANTON, Calif. — In a deal signaling cooperation between two of the largest supermarket operators in the U.S., Blackhawk Network here last week said it would roll out its third-party gift card program at stores operated by Kroger in time for the holidays. Blackhawk is a subsidiary of Safeway, also based here. Cincinnati-based Kroger is the largest U.S. supermarket chain, with nearly 2,500 stores in 31 states. Kroger plans to support the launch of the new program with aggressive marketing campaigns that include television, radio and in-store promotions, Blackhawk said. Kroger will roll out the cards at its convenience stores in late 2008, Blackhawk added.
LABOR GROUPS PROTEST TESCO'S FRESH & EASY
LOS ANGELES — Tesco's Fresh & Easy Stores here and in Las Vegas attracted negative publicity from labor groups last week. Members of the United Food and Commercial Workers Union have been handing out leaflets at stores, telling potential customers the chain has been cited in the United Kingdom for food safety violations, exploiting child labor and environmental irresponsibility. The Alliance for Healthy and Responsible Grocery Stores, which includes labor, environmental and faith-based organizations, held a demonstration outside an investors meeting Tesco held here last week, urging the company to agree to develop stores in underserved areas, champion the environment and create good jobs.
DOLLAR TREE PREPARES FOR SALES PRESSURES
CHESAPEAKE, Va. — Dollar Tree Stores here said sales of back-to-school and Halloween items helped lift sales by 9.6% and earnings by 19% during the fiscal third quarter ended Nov. 3. But economic pressures could depress sales in the current quarter, the company added. Bob Sasser, president and chief executive officer, said the chain will rely on more frequent shopping trips driven by increased food offerings as it weathers the effects of economic pressures on its shoppers. Sales improved 9.6% to $998 million for the quarter, and same-store sales improved by 1.9%, mainly due to an increase in store traffic, the retailer said. Earnings of $35.9 million were improved from $32.5 million in the same period last year.
RESHDIRECT WORKERS TO HOLD UNION VOTE
NEW YORK — Warehouse workers at Internet grocer FreshDirect here will vote this month to settle a dispute over which labor union — if any union — should represent them, union officials said last week. The National Labor Relations Board last week set a vote for FreshDirect workers to choose between affiliating with United Food and Commercial Workers Local 348, which traditionally represents grocery workers, or Teamsters Local 805, a warehouse union.