Publix earnings tumble as investments sour

Dive Brief:

  • Publix reported robust top-line results for the second financial quarter ended June 25. Comparable store sales rose 7.8% while net sales increased 9.3%, to $12.9 billion.
  • But the grocer took a significant hit to net earnings, which fell 37.7%, to $628.4 million. Adjusted earnings per share in Q2 fell from 29 cents to 18 cents.
  • Publix CEO Todd Jones blamed “challenges in the stock market” for the earnings tumble. The price of the company’s stock, which is not publicly traded, declined from $14.91 to $13.84.

Dive Insight:

According to Publix’s latest quarterly filing with the Securities and Exchange Commission, the company lost $303 million in Q2 on investments it has made. In the first half of the year, its investment loss totaled $826 million.

The grocer’s investments include debt and equity securities, and according to its latest quarterly announcement, volatility in the latter has contributed to the steep slide in earnings over the past several months. Excluding the impact of net unrealized losses on equity securities this year and net unrealized gains on equity securities in 2021, Q2 net earnings would have come in at $895.5 million, down just 2.7% from the same period last year.

The stock market has followed a steep downward trend this year, with the S&P 500 declining more than 14%. July saw an uptick, however, raising hopes for a better back half of the year.  

In past years, Publix has come out well ahead on its investments, logging more than $1.3 billion in investment income in 2021 and $975 million in 2020.

Earnings tumble aside, Publix’s top line results show the company remains a highly relevant shopping destination for inflation-weary consumers. It has a leading reputation for customer service and offers a variety of promotions, including buy-one-get-one deals, digital coupons and special sales.

But competitors may be starting to take a bite out of its business. In the 13-week period that ended July 10, trips to Publix stores declined 5.2% on a year-over-year basis, according to IRI data. By comparison, trips to Albertsons stores rose 5.6% while Walmart trips rose 7.1% during the same period.  

So far this year, Publix has opened 10 supermarkets, five of which replaced existing locations, and remodeled 40 stores. It currently operates 1,296 stores in seven states, and next year plans to open its first store in Kentucky.

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