ARLINGTON, Va. — Sales and profits improved for independent supermarket operators in 2012, according to a report from National Grocers Association here.
The 2013 Independent Grocers Financial Survey, conducted by NGA and FMS, found that independent grocers posted an average net profit before taxes of 1.65% in 2012, up from 1.12% in 2011. They also grew inflation-adjusted same-store sales and improved gross margins across key store categories, the survey found.
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"Fiscal year 2012 was quite the comeback year for independent food retailers," said Peter Larkin, president and chief executive officer, NGA. "We found vast improvements in financial performance, much higher levels of store development, stabilized payroll and lower levels of theft-related shrink for the majority of respondents."
The top 25th percentile in net profits had an average net profit of 4.01%, achieved through superior expense control, margins and sales, the report stated.
"The profit leaders continued to do well, but the rest of the industry significantly reduced the gap between the best and the rest by tightly managing costs and margins,” said Robert Graybill, president and CEO of FMS. Independents also closed in on the publicly-traded grocery chains."
Read more: NGA Leaders Tout Importance of Independents
Some key findings from the report include:
• Fiscal year 2012 same store sales were up 1.46% before adjusting for inflation. Inflation-adjusted same-store sales were up 0.2%, vs. a decline of 2.2% in 2011. Fewer independent grocers reported sales gains below the rate of inflation at 49.2%, vs. 72.7% in 2011.
• Many retailers improved margins in key categories, leading to a slight increase in the total store margin to 26.48%.
• 1.9% of companies reported negative profit numbers versus 13.5% in 2011.
• On the cost side, health care costs continued to increase at a rate of 7.6% in 2012, with 81.8% of retailers expecting higher costs in 2013. With lower energy prices, utility costs did come down as a percentage of sales, as did rent expenses.
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