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“Retailers were achieving decent, nominal sales and earnings during the second half of 2011, though there was actually a slowdown in real sales growth because of inflation.”
— Andrew Wolf, BB&T Capital Markets
The second half “was a period of tough sledding for the industry as a whole because inflation was running amok."
— Scott Mushkin, Jefferies & Co., New York
Roundy's, Stater Bros.
• Roundy’s, Milwaukee, whose sales rose 3.1% to $2 billion for the second half, with comps up 1.7% in the third quarter and down 1.2% in the fourth, and operating income up 34.1% to $36.6 million.
Most of Roundy’s real sales growth is coming from the five Mariano’s stores the company operates in Chicago, Wolf pointed out, “while its comp sales are being impacted by inflation, which is emblematic of most of the industry.”
Mushkin said Roundy’s fell victim to the impact of inflation in the fourth quarter. “Most of its core markets cater to that middle-class customer that’s really struggling,” he explained.
According to Giblen, “Roundy’s operates in a very stable, very competitive environment. In Wisconsin it operates good high-quality stores that are not unionized and that offer good service and good perishables, and in Chicago it has the upscale Mariano’s format that’s going up against two sleepy competitors in Dominick’s and Jewel.”
• Stater Bros. Markets, San Bernardino, Calif., whose sales rose 5.9% to $1.9 billion during the half, with comps up 5% in the chain’s fourth quarter and 6.9% in the first, and whose operating income rose 4.5% to $51.6 million.
“Stater is in a snap-back situation,” Giblen noted. “As the housing industry in the Inland Empire of Southern California has started to come back, so have financial results at Stater Bros., which is the area’s low-price leader.”
Mushkin said he was struck by how strong Stater’s comps were during the half. “It’s amazing to see how well it’s been able to reposition pricing and invest gross margin to get a great consumer response.”
