Landover-based Giant Food Inc. posted a 19 percent increase in profits and a 3 percent increase in sales during its third quarter, but revenues from its stores open a year or more were nearly flat, suggesting the popular supermarket chain has not escaped the slowdown being felt by other retailers.
"It's the economy itself that is the problem, not us," said David Sykes, Giant treasurer and senior vice president, explaining the drop to a0.2 percent increase compared with what is usually a 4 percent or 5 percent increase in revenues for same-store sales for Giant during a quarter.
Mr. Sykes said the sales of Giant's established stores were eaten away by the opening of its newer stores -- such as the gourmet Giant in Hunt Valley and in Dale City and Springfield, Va.
With the Baltimore-Washington area so saturated with supermarkets and with a weaker economy slowing sales growth, the company is meeting challenges it never had to face before. Industry observers have said increased competition from membership warehouse clubs like The Price Club have also dampened sales growth.
Mr. Sykes said that he could not discount the competition from those outlets and that as a tactic Giant has added a "Super Deals" aisle to many of its locations. Those aisles, which have been in operation for about nine months, have grown to include roughly 200 items sold in bulk and at lower prices, imitating the warehouse club concept. Mr. Sykes said a new program is under way to expand the section.
A closer look at the quarter that ended Nov. 3 showed: Sales at HTC Giant's 151 supermarkets were $757.6 million, compared with $735 million a year ago; pretax income was $40.5 million, compared with a pretax income of $34 million a year ago; net income was $24.9 million, 3.29 percent of sales, compared with net income of $20.9 million, or 2.84 percent of sales; and earnings per share were 42 cents, a 20 percent increase over the 35 cents per share last year.
Giant is the 12th-largest supermarket company in the country, with $3.25 billion in sales in fiscal 1990. Its profit margin -- 3.34 percent of sales -- placed it second among all publicly traded grocery chains and was more than three times the industry average.