Food Retailers Overcome Increases in Energy, Health Care

Arlington, Va., Food retailers overcame continuing sharp increases in energy, health-care and other costs to post a median after-tax net profit of 1.91% in fiscal year 2006-2007, up from 1.46% the previous year, according to the Food Marketing Institute (FMI) Annual Financial Review 2006-2007.

The smallest and largest companies reported strong bottom-line results. Retailers with annual sales under $100 million had a median net profit of 1.83%, and those with sales of $1 billion or more, 1.93%. Mid-sized retailers with sales in between did not fare as well, with profits of 1.10%.

Nearly nine in 10 retailers (86%) are optimistic about their profit outlook for fiscal year 2007-2008. The number of executives who are “very optimistic” declined to 30%, compared with 39% the previous year, and those “somewhat optimistic” increased to 56%, from 50%, according to the report.