Consumer demand for groceries triggered by the COVID-19 outbreak boosted Weis Markets’ net and same-store sales by double digits in the fiscal 2020 first quarter.
For the quarter ended March 28, net sales totaled $985.8 million, up 12.4% from $876.7 million a year earlier, Sunbury, Pa.-based Weis Markets said late yesterday. Comparable-store sales jumped 12.8% year over year.
The onset of the coronavirus pandemic and the ensuing business and school closings and public stay-at-home orders impacted quarterly results starting in the second week of March, driven by a “significant surge” in customer traffic and sales, according to Weis Markets. The regional grocer said a mild winter impacted January and February sales compared with a year ago.
Excluding the pandemic’s impact, Weis Markets estimated that comp-store sales rose 1.5% versus the 2019 quarter.
Income from operations, meanwhile, grew 110% to $37.4 million in the 2020 first quarter from $17.8 million a year ago.
“Our team quickly adapted to this changed market environment and resulting supplier disruptions by accelerating and increasing replenishment shipments to our stores and implementing a comprehensive COVID-19 prevention program in our stores, distribution, manufacturing and support facilities to provide a safe shopping and working environment,” said Jonathan Weis (left), chairman and CEO of Weis Markets, in a statement.
On the earnings side, first-quarter 2020 net income came in at $26.7 million, or 99 cents per share, soaring 86% from $14.3 million, or 53 cents per share, in the prior-year period.
“We carry a profound sense of sadness for those who are suffering or have lost their lives during this pandemic, and a tremendous appreciation for the essential Weis Markets associates who come to work each day, providing the products and services that are allowing our customers to stay at home and help stop the spread of the novel coronavirus,” Weis added.
The Mid-Atlantic supermarket chain finished the first quarter with 197 stores in Pennsylvania, Maryland, Delaware, New Jersey, New York, West Virginia and Virginia, compared with 200 a year earlier.
Weis Markets’ quarterly results are good news for retailers focused on core grocery categories, according to analyst Scott Mushkin, founder and CEO of R5 Capital.
In a research note on Tuesday, Mushkin said R5’s team reckoned Weis’ March comp sales — covering 28 days — as up 38.3%, compared with a 1.5% gain for the other 63 days in the quarter. R5 also pegged the retailer’s EBIT (earnings before interest and taxes) margin at 20.16%, based on incremental revenue of $96 million and incremental EBIT of $19.3 million.
“Weis Markets, a small regional supermarket chain in the Mid-Atlantic reported 1Q results yesterday that we believe bode well for retailers catering to the in-home consumables marketplace,” wrote Mushkin, whose firm doesn’t cover Weis for stock analysis. “Specifically, we calculate March comps were 38% and incremental EBIT was 20%. This is in-line/above our research and suggests that fears of additional costs eating away at all the profits from the strong sales levels may be overblown.”
As consumers adjust their shopping behavior and budgets during the pandemic, grocery retailers are likely to continue seeing robust sales growth, he added.
“In recent conversations with private operators, it seems that comps sales remain well north of 10%, and incremental margins are also still running near 15%,” Mushkin said. “Our focus remains on in-home consumables retailers Walmart, BJ’s and Sprouts that should see a sales and earnings benefit from both the COVID-19 pandemic and the likely ensuing economic slowdown, as all three provide consumers with low-price goods.”
In other news, Weis Markets yesterday announced announced its 13th annual Fight Hunger in-store donation program. At checkout, customers can round up the dollar total of their transaction or buy a $1, $3, $5 or $10 voucher to help support families in need in their community. The campaign benefits regional food banks in the retailer’s Mid-Atlantic market area.
“This is a difficult time for a growing number of families who are struggling with food insecurity throughout our seven-state marketing area,” said Ron Bonacci, Weis Markets Vice President of Advertising and Marketing. “Our Fight Hunger program gives customers the opportunity to donate to regional food banks who work to support thousands of local food pantries and hunger groups.”
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