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May 14, 2013

US: Stater Bros takes margin hit to keep custom

Regional US retailer Stater Bros. has reported higher half-year sales but lower profits - and admitted it "sacrificed" margins to keep customers.

By Dean Best

Regional US retailer Stater Bros. has reported higher half-year sales but lower profits – and admitted it “sacrificed” margins to keep customers.

The company, which runs over 160 stores in California, booked a 1.7% increase in sales to US$1.93bn. Stater said like-store sales were up 1.1%.

However, Stater Bros. chairman, president and CEO Jack Brown said the retailer decided to “keep prices low” to maintain traffic, which meant margins came under pressure.

“During these tough economic times, we have made a conscious marketing decision to help our valued customers by keeping our prices low while providing them quality and value on each of their visits to their Stater Bros. supermarket. The reduction in our current year net income reflects a decrease in gross profit margins. We have sacrificed gross margin in the current year periods in order to maintain and grow customer counts,” Brown said.

Net income fell by a third to $17m.

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