US retailer Stater Bros. has booked a drop in annual profits due to falling sales within stores and to the impact of its sale of Santee Dairies to Dean Foods.

The grocer, which runs 167 supermarkets in southern California, booked net income of US$24.6m for the year to 26 September, down from $34.8m a year ago.

The drop on profits was posted despite a rise in fourth-quarter earnings – quarterly net income stood at $5.9m against $5m a year earlier – but came on the back of falling annual and quarterly sales.

Annual sales decreased 4.2% to $3.61bn. Excluding the impact of the Santee sale, which was closed in the first quarter of the retailer’s fiscal year, sales dropped 1.8%.

In the fourth quarter, sales fell 5.3% to $897.4m. Stripping out the Santee disposal, sales dropped 3.2%.

Stater Bros. said its annual “like-store” sales were down 2.5% and fell 3.3% over the fourth quarter.

Chairman, president and CEO Jack Brown said: “We continue to face some of the toughest economic and competitive pressures in our company’s history. We continue to focus on the values we can pass on to our valued customers so they get the most out of their shopping dollars and assisting them and their families during these difficult times. We still provide a friendly and satisfying experience on each and every one of their visits to our supermarkets. We remain committed to controlling costs as we weather the effect of these economic times.”