“This profit growth is indicative of the retail food industry’s ongoing effort to create the kinds of efficiencies that yield maximum value,” said Tim Hammonds, FMI president and CEO. “The industry as a whole is working toward this end and it’s encouraging to see that retail operations remain healthy in today’s highly competitive environment.”
The industry’s strong profit performance during the past year is reflective of a robust economy where inflation, interest rates and unemployment remained low, and consumer confidence remained very high. Other factors that affected performance include increased competition among store formats, operational improvements and the addition of gasoline to the traditional format among larger companies.
Other results of the FMI 1999-2000 Annual Financial Review include:
- Operating income showed the first decrease in three years — at 2.94 percent of sales.
- Interest expenses fell from 1.04 percent of sales to 0.92 percent — its lowest level since 1995-96.
- Return on assets rose for the first time in three years — from 3.27 percent to 3.55 percent.
- Inventory rose for the second consecutive year to 24.41 percent of total assets.
- After falling for the first time in 10 years last year, the percentage of assets in property and equipment rebounded this year — growing from 44.92 percent of assets to 45.22 percent.
- Capital expenditures increased from 2.60 percent of sales to 2.90 percent in 1999, indicative of continued merger and acquisition activity and the trend to expand asset bases.
- Cash flow remained healthy, as cash on hand increased for the fourth consecutive year, despite a significant decrease in “net cash provided by operating activities.”
For more information, or to purchase a copy of the FMI 1999-2000 Annual Financial Review ($30 FMI members; $60 non-members), please call FMI (202-452-8444) or visit the FMI Web site (http://www.fmi.org).