Publix Comps Climb, Earnings Jump in Q2

New stores, rising prices and decreasing costs helped to trigger sales and earning gains for Publix Super Markets in its fiscal second quarter.

The Lakeland, Fla.-based food retailer's sales for the period ended June 30 totaled $8.8 billion, a 4% increase, with same-store sales improving by 1.7%. That figure was negatively affected by Easter falling in the first quarter of this year, but in the second a year ago. Publix said the holiday shift slimmed comps by about 1.2%, or $105 million.

Net earnings of $616.2 million increased by 24.5% and were helped along by more favorable tax laws than the year prior and by a new accounting standard requiring equity securities be measured at fair value, with net unrealized gains and losses from changes in the fair value recognized in earnings. Excluding the impact of the new accounting standard, net earnings would have been $571 million, an increase of 15.3% percent.

The increase in sales for the three-month period was primarily due to new stores as well as increased comps, Publix said, while comp sales increased primarily due to increased product costs, partially offset by the effect of the early Easter holiday.

Sales for the six months ended June 30, 2018, were $18.0 billion as compared with $17.1 billion for the six months ended July 1, 2017, an increase of $925.7 million, or 5.4%. The increase in sales for the six months ended June 30, 2018, as compared with the six months ended July 1, 2017, was primarily due to new supermarket sales and an increase in comparable store sales of 3.4%. Comparable store sales for the six months ended June 30, 2018, increased primarily due to higher product costs.

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Gross profits as a percent of sales held steady from last year’s second quarter at 27.3%, but net profits jumped on cost reductions as a percent of sales, Publix said.

The company did not make mention of any effects of a boycott that hit some stores in May after reports arose of Publix’s political contributions – an issue prompting the company to restate its policies on such contributions. Its press release and Securities and Exchange Commission filings about the financial period also did not quantify any effects of a round of store closures accompanying a Chapter 11 filing by Jacksonville, Fla.-based Southeastern Grocers, one of the company’s largest regional competitors.

Net earnings as a percentage of sales were 7% in the quarter, up from 5.9% in last year’s second quarter, primarily due to the decrease in the effective income tax rate due to the Tax Act and the recognition of net unrealized gains on equity securities.

Publix stock, which is available only to directors and employees, increased from $41.5 per share to $42.55 per share, effective Aug. 1.

“Since the beginning of the year, our stock price has increased from $36.85 to $42.55, over 15%,” said Publix CEO and President Todd Jones. “Our associates deserve the credit for continuing to make us a leader in customer service.”