LOS ANGELES — Unified Grocers here said soft economic conditions and high unemployment across its operating area resulted in lower sales and earnings for the third fiscal quarter, which ended July 3.
For the quarter, net income at the wholesaler cooperative dropped 66.7% to $1.3 million, while sales fell 1.2% to $980.1 million. For the 39-week year-to-date period, net income fell 21.1% to $8 million, while sales dropped 1.7% to $2.9 billion.
The company said the decline in earnings resulted from several factors, including a decline of $2.8 million resulting from “volatile equity markets that negatively impacted certain life insurance contracts maintained by the company,” the higher level of food inflation a year ago and a drop in the level of vendor-related support so far in fiscal 2010 that was present in fiscal 2009.
“Sales volumes are down because consumers are still cautious about what they are spending and are continuing to trade down in many product categories,” said Al Plamann, president and chief executive officer. “Though earnings are in line with our budget, we continue to focus on expense controls to keep our distribution network as efficient and effective as possible.”
In a filing with the Securities and Exchange Commission, Unified said its cost of sales decreased by $14 million to $891.7 million in the second quarter in its distribution business, compared with the year-ago period. As a percentage of net wholesale sales, cost of sales was 91.3%, vs. 91.6% in the second quarter of 2009.
Vendor-related activity contributed to a 0.3% decrease in cost of sales for the second quarter, primarily driven by a change in vendor marketing activities, Unified said in the filing.
