Report: Food Retailers Performed Well in 2007
Las Vegas Supermarket industry sales increased 4.6% in 2007, and same-store sales rose 4.2%, the highest mark for this performance measure in more than a decade, according to the Food Retailing Industry Speaks: Annual State of the Industry Review 2007 released on Monday by the Food Marketing Institute (FMI).
The gains, however, were largely offset by the 4.2% food-at-home inflation rate last year, the report said. Unlike previous years, mid-sized food retailers posted the highest growth figures with overall sales increasing 7.4% and same-store sales 6.5%. The increases among independent retailers and the largest chains were closer to the industry medians.
Among independents, overall sales grew 4.6% and same-store sales 4.4%. For the largest chains, these growth figures were 5.2% and 4.2%, respectively.
“The industry performed quite well in an extraordinarily challenging year,” said FMI president and CEO Tim Hammonds. “Companies managed spikes in energy, commodity, healthcare and credit-card interchange costs, along with relentless competition in the industry.”
Supermarkets are tightly managing their own budgets, tempering the impact of cost increases in numerous areas, the report indicated. These efforts contributed to improvements in key performance figures. Labor productivity (sales per hour) increased to $138.90, from $122.14 in 2006, while space productivity (sales per square foot) rose to 8.1% from 7.3%. Inventory turns increased 15.6% for the total store from 13.5%.
This year’s report focused on advertising and found that annual spending remained at 1.0% of sales. The study showed that retailers are moving away from mass-marketing vehicles to more targeted ones, compared with spending results for 2004, when the report last studied this area.
The report found the following: Newspaper ads, including circulars, declined to 52.2% from 56.7%; direct mail increased to 16.7% from 14.6%; radio advertising rose to 9.2% from 7.3%; and more than one-third of retailers (37.1%) focus advertising on the fast-growing Hispanic market, allocating 5.5% of their ad budget.
Meanwhile, companies are starting to use new media, the report said. This includes using Web sites other than their own (19.4%), YouTube (6.3%), blogs (6.3%) and text messaging (6.3%).
Cabela’s posts 1Q sales increase
SIDNEY, Neb. Cabela’s posted total revenue of $535.5 million for its first quarter ended March 29, an increase of 15.9% over last year’s $462.1 million.
Net income for the quarter increased 39.4% to $10 million, or 15 cents per diluted share, compared to $7.1 million, or 11 cents per diluted share, for the like 2007 period.
“We are very pleased with our 70% growth in consolidated operating income for the first quarter of the year, despite ongoing challenges in the consumer environment,” said president and ceo Dennis Highby. ” … We remain focused on improving retail store profitability and are already seeing positive benefits from initiatives we put in place last year. We have improved four-wall contribution and lowered inventory per square foot in our comp stores. At the same time, we remain on track with our store expansion plans and expect to open a new store in Scarborough, Maine, on May 15 and another in Rapid City, S.D., in August.
“We are committed to taking the necessary steps to improve our business across the board and are pleased with the traction we are getting with our initiatives to drive retail profit improvement,” continued Highby. “We remain confident our leadership position in the marketplace will afford us significant growth opportunities well into the future.”
Walgreens posts 7.9% April sales boost
DEERFIELD, Ill. Walgreens today announced April sales of $4.85 billion, an increase of 7.9% over last year’s $4.49 billion. Comparable-store sales rose 1.6% while comparable-store front-end sales decreased 3.1%.
April sales were affected negatively this year due to an earlier Easter that helped boost sales in March. Sales for the two months, combined, increased 9.2% over 2007. Comparable-store sales for March/April rose 3% while comparable-store front-end sales rose 4%.
Front-end sales for the drugstore chain were aided by allergy medicine Zyrtec, which recently switched from prescription only to over-the-counter.
Aril pharmacy sales rose 10.8% and comparable-pharmacy sales rose 4.2%.
Walgreens opened 38 drugstores in April—including four relocations—acquired eight and closed 3. At April 30, the company operated 6,614 locations.