The supermarket industry rebounded financially in fiscal year 2004-2005 led by the top 25 percent profit leaders, which posted particularly strong results, according to the just-released Food Marketing Institute (FMI) Annual Financial Review.
Total industry net profits averaged 1.16 percent, crossing the 1 percent mark for the first time in three years. The profit leaders reported net earnings more than three times the average at 3.68 percent.
“In a highly price-competitive market, companies earned their profits through increased efficiency and lower debt,” said FMI President/CEO Tim Hammonds. “They are investing profits in departments and services that deliver convenience and fresh foods, and upgrading technology to optimize productivity and more precisely tailor assortment to consumer demand.”
The industry’s top 25 performers “far exceeded” industry averages in a number of categories, including:
• Earnings before interest, taxes, depreciation and amortization (EBITDA) — 6.36 percent of sales for the leaders compared to 4.38 percent for the industry overall.
• Capital expenditures — 2.49 percent to 2.24 percent.
• Return of assets (ROA) — 14.16 percent to 3.75 percent.
• Return on equity (ROE) — 25.34 percent to 11.08 percent.
• Asset turnover — 1.99 to 0.79.
The survey also revealed that a large majority of the financial executives surveyed for the report (85 percent) are optimistic that their companies will perform well in the 2005-2006 fiscal year, including 30 percent who are “very optimistic.”
Total industry net profits averaged 1.16 percent, crossing the 1 percent mark for the first time in three years. The profit leaders reported net earnings more than three times the average at 3.68 percent.
“In a highly price-competitive market, companies earned their profits through increased efficiency and lower debt,” said FMI President/CEO Tim Hammonds. “They are investing profits in departments and services that deliver convenience and fresh foods, and upgrading technology to optimize productivity and more precisely tailor assortment to consumer demand.”
The industry’s top 25 performers “far exceeded” industry averages in a number of categories, including:
• Earnings before interest, taxes, depreciation and amortization (EBITDA) — 6.36 percent of sales for the leaders compared to 4.38 percent for the industry overall.
• Capital expenditures — 2.49 percent to 2.24 percent.
• Return of assets (ROA) — 14.16 percent to 3.75 percent.
• Return on equity (ROE) — 25.34 percent to 11.08 percent.
• Asset turnover — 1.99 to 0.79.
The survey also revealed that a large majority of the financial executives surveyed for the report (85 percent) are optimistic that their companies will perform well in the 2005-2006 fiscal year, including 30 percent who are “very optimistic.”
- KC's View:
