Publix Reports Sales Growth Amidst Inflationary Pressures in 2024
Publix Super Markets Inc., the Florida-based grocery giant, recently unveiled its financial performance for 2024, showcasing robust sales growth alongside challenges posed by inflation and evolving market dynamics. The company’s annual results, released last week, reveal a 4.6% increase in sales, reaching $59.7 billion compared to $57.1 billion in 2023. This growth trajectory reflects Publix’s continued dominance in the competitive supermarket landscape across the Southeastern United States.
A key indicator of Publix’s performance is its comparable-store sales, which measure the sales growth in existing stores. For the fiscal year ending December 28, comparable-store sales increased by 2.9%. This figure highlights the company’s ability to maintain and expand its customer base despite inflationary pressures and evolving consumer preferences.
Publix CEO Kevin Murphy attributed the company’s success to its dedicated associates. "Publix’s success is due to our associates," Murphy stated in the news release. "I’m so thankful to serve with them in making shopping at Publix a pleasure." This acknowledgment underscores Publix’s commitment to its employees and its recognition of their crucial role in delivering a positive shopping experience.
The company’s net earnings for the fiscal year also demonstrated positive momentum, reaching $4.6 billion compared to $4.3 billion in 2023, representing a 6.6% increase. Correspondingly, earnings per share increased to $1.41 per share, up from $1.31 per share in the previous year.
However, a deeper analysis reveals a more nuanced picture. Excluding the impact of net unrealized gains on equity securities in both 2024 and 2023, net earnings would have been $4 billion in 2024, a decrease of 1% compared to $4.1 billion in 2023. Similarly, earnings per share, adjusted for these unrealized gains, would have been $1.23 per share for both fiscal years. This adjustment suggests that while Publix experienced overall growth, its core profitability faced headwinds.
Jennifer Wu Tucker, an accounting professor at the University of Florida, shed light on the factors influencing Publix’s performance. According to Tucker, the increase in same-store sales was primarily driven by inflation, which covered the higher costs of acquiring products. "Inflation has affected them," Tucker explained. "The incoming costs of the goods increased and then they passed down the cost to customers then the sales price increased too."
This analysis underscores the impact of the broader economic environment on Publix’s operations. As inflation drives up the cost of goods, Publix is compelled to pass those costs on to consumers, resulting in higher sales figures. However, this does not necessarily translate into increased profitability, as evidenced by the adjusted net earnings figures.
Further dissecting the sales data, the article highlights that the 2.9% sales increase reflects performance in existing stores, while an additional 1.7% of overall sales growth was attributed to new supermarket openings. This indicates that Publix is pursuing a dual strategy of organic growth through existing stores and expansion through new locations.
In comparison, 2023 saw a 4.7% increase in sales from 2022. Adjusting for an extra week in the 2022 fiscal year, the sales increase from 2022 to 2023 would have been 6.7%. Existing store sales in 2023 grew by 4.2%, while new store openings contributed 2.5% to overall sales growth. This suggests that inflation had a more pronounced impact on sales growth in 2023 compared to 2024.
On the expense side, Publix managed to reduce operating and administrative expenses, primarily due to changes in the Medicaid reimbursement process at its pharmacies. However, this reduction was offset by an increase in overall payroll costs driven by higher wages for its workers. This reflects the company’s commitment to attracting and retaining talent in a competitive labor market, potentially fueled by inflationary pressures.
The change in Medicaid reimbursements also had a mixed impact on Publix’s financial performance. While it lowered pharmacy sales and reduced administrative costs, it also negatively affected the company’s gross profit. This illustrates the complex interplay of factors influencing Publix’s bottom line.
Operating profit in 2024 stood at 7.5%, lower than 7.8% in 2023 and 8.7% in 2022. "The decrease in operating profit was primarily caused by the increase in payroll costs," Wu Tucker said. She added inflation was likely the motivation behind paying workers more in recent years. This trend suggests that rising labor costs are putting pressure on Publix’s profitability.
Turning to the fourth quarter results, Publix reported sales of $15.5 billion for the last three months of 2024, a 5.5% increase from $14.7 billion in 2023. Comparable-store sales for the three months ended December 28 increased by 4.1%. The company estimates that Hurricane Milton contributed 1.4% to the sales increase during this period.
Net earnings for the fourth quarter were $1.2 billion, with earnings per share increasing to 37 cents per share, up from 36 cents per share in 2023. Excluding the impact of net unrealized gains on equity securities, net earnings would have been $1.1 billion, with earnings per share at 34 cents per share, compared with 32 cents per share in 2023.
The reported results are based on audited financial statements filed with the U.S. Securities and Exchange Commission. Publix provides further financial information on its website.
Effective March 1, Publix’s stock price increased from $18.05 per share to $19.20 per share. Publix stock is not publicly traded and is available for sale only to current Publix associates and members of its board of directors.
Looking ahead, Publix plans to invest $2.5 billion in 2025 on new stores, remodeling existing stores, constructing and expanding warehouses, and new and enhanced technology including hardware and software. This significant investment signals Publix’s commitment to future growth and its focus on enhancing its operations and customer experience.
Publix operates 1,390 store locations across eight states in the Southeastern United States, including 872 stores in Florida. The company also has a significant presence in Alabama, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia. Publix is one of the 10 largest-volume supermarket chains in the country, with retail sales in 2022 of $54.5 billion. Founded in 1930, the grocer employs 255,000 people throughout its operating area.
In conclusion, Publix’s 2024 financial results demonstrate solid sales growth, driven by a combination of existing store performance and new store openings. However, the company faces challenges related to inflation, rising labor costs, and evolving market dynamics. Publix’s strategic investments in its workforce, infrastructure, and technology position it for continued success in the years to come. The company’s commitment to its associates and its focus on delivering a positive shopping experience remain key differentiators in the competitive supermarket industry. While inflationary pressures may continue to pose headwinds, Publix’s strong brand reputation and loyal customer base provide a solid foundation for sustained growth.
