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. 

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By GlobalData