WHOLESALERS' MARGINS HIT 7-YEAR LOW

FALLS CHURCH, Va. -- Despite a healthy sales increase, wholesalers' profit margins shrank to a seven-year low in 1993, according to a recent report by the National-American Wholesale Grocers' Association here.

.8% in 1993, compared with 5.1% in 1992 and 4.8% in 1991.

Wholesalers' income before taxes, however, averaged 0.9% of sales in 1993 -- the smallest profit margin recorded by wholesalers in the seven years NAWGA-IFDA has conducted the study. Wholesalers' income before taxes averaged 1.4% of sales in 1992 and 1.3% in 1991.

Among food-service distributors, sales in 1993 increased an average of 7.4%, compared with 4.7% in 1992 and 5% in 1991. Average income-before-tax margins for food-service distributors totaled 1.1% of sales in 1993, equal to the rate of 1992 and up slightly from the 0.8% rate reported in 1991.

"Thank goodness food distributors are accustomed to operating on such slim profit margins, or else these numbers would be very intimidating," John Block, president of NAWGA-IFDA, said in a statement.

Block said distributors are seeking to counter low profit margins "by driving larger volumes of food through their warehouses. Our NAWGA-IFDA members also are looking for new ways to increase the value they provide their customers, which ultimately has a positive impact on profitability."

A total of 89 companies participated in the trade association's survey -- 20% more than the previous year -- including 31 wholesale grocers and 58 food-service distributors.