US: Margin pressure hits Stater Bros bottom line

By Katy Askew | 13 February 2013

Profit down
Margins decline
Sales, footfall edge up

Profits at Stater Bros have been hit by pressure on margins, as the California-based retailer invested in pricing during the first quarter.

Stater Bros revealed yesterday (12 February) that first-quarter net income fell to US$5.4m, compared to US$9m in the first quarter f last year.

Gross profit margins dropped to 25.88% of sales compared 27.03% of sales in the comparable period of last year.

"The Company has made a conscious decision to not pass on all of the costs of inflation that we have experienced," chairman, president and CEO Jack Brown commented. "Since the beginning of this economic crisis, we have maintained a policy of retaining and growing customer counts by providing value and superior service to our customers. We feel it is important to retain our customers so when the economy does finally turn around they will still be shopping at their local Stater Bros supermarket"

The company suggested that this strategy is proving successful, with comparable sales up 0.83% and the customer count up 250,000 year-on-year.

Show the press release

Sales And Customer Counts Up At Stater Bros. - First Quarter 2013 Results

SAN BERNARDINO, Calif., Feb. 12, 2013 /NEWS.GNOM.ES/ - Today, Jack H. Brown , Chairman, President and Chief Executive Officer of Stater Bros. Holdings Inc. announced financial results for the first quarter of fiscal 2013 which ended on December 30, 2012.
(Logo: http://photos.NEWS.GNOM.ES.com/prnh/20121101/LA04466LOGO)
The Company's sales increased 0.83% in the first quarter of fiscal 2013 compared to the same period of the prior year. Like store sales also increased $8.0 million or 0.83% for the thirteen weeks ended December 30, 2012compared to the thirteen weeks ended December 25, 2011. Consolidated sales in the first quarter of fiscal 2013 were $968.7 million compared to $960.7 million in the first quarter of fiscal 2012.
Customer counts increased over 250,000 in the first quarter of fiscal 2013 compared to the same period of the prior year.
Gross profit margins for the thirteen weeks ended December 30, 2012 were 25.88% of sales compared to the thirteen weeks ended December 25, 2011 gross profit margin of 27.03% of sales.
The Company reported net income for the thirteen week first quarter ended December 30, 2012 of $5.4 millioncompared to net income for the thirteen week first quarter ended December 25, 2011 of $9.0 million.
Brown said, "The decline in net income was primarily due to a lower gross profit margin in the first quarter of fiscal 2013 compared to the first quarter of fiscal 2012 as a result of our commitment to keep prices low, to the extent possible, to help our ‘Valued Customers' weather these tough economic times which resulted in increasing our customer counts by 250,000 in the quarter.
"The Company has made a conscious decision to not pass on all of the costs of inflation that we have experienced.
"The unemployment rate in our marketing area of 10.9% continues to be higher than the national average of 7.8% and State of California average of 9.8%.
"Since the beginning of this economic crisis, we have maintained a policy of retaining and growing customer counts by providing value and superior service to our customers. We feel it is important to retain our customers so when the economy does finally turn around they will still be shopping at their local Stater Bros. Supermarket."
Stater Bros. is the largest privately owned Supermarket Chain in Southern California and the largest privateemployer in both San Bernardino County and Riverside County, with annual sales in 2012 of $3.9 billion. The Company currently operates 167 Supermarkets, and there are over 18,000 members of the Stater Bros.Supermarket Family.

Original source: Stater Bros

Sectors: Financials, Retail