Weis Markets reported comparable store sales up 1.3 percent for its 13-week third quarter ended Sept. 26, with fuel sales included. Excluding fuel, comps decreased 1.2 percent.
Total revenue increased 3 percent to $1.28 billion. Sales growth was driven primarily by higher fuel sales and sales from new stores, partially offset by lower sales in pharmacy, dairy and produce, the Sunbury, Pennsylvania-based grocer said.
“In the third quarter we delivered higher total revenue and improved earnings while customers remained cautious with their spending and continued to seek affordability and value,” said Jonathan H. Weis, chairman, president and CEO of Weis Markets, in the Nov. 3 news release. “Higher fuel sales, reflecting both retail price inflation and increased gallons sold, along with sales from new stores, supported the quarter’s total revenue increase. Inflation Reduction Act-related pharmacy pricing changes, egg price deflation and lower produce demand during the Cyclospora outbreak moderated sales performance. We continue to support our customers through price investments and an expanded loyalty marketing program.”
Three unusual headwinds in the quarter
Pharmacy sales took an approximately $14.56 million hit from pricing headwinds tied to the Inflation Reduction Act’s Medicare maximum fair price provisions, effective Jan. 1, reducing total revenue growth by about 1.2 percentage points. Dairy sales reflected lower egg pricing versus a year ago, and produce sales were hurt by lower customer demand during the third quarter Cyclospora outbreak.
Margins and earnings improve
Gross profit for the third quarter increased 5.8 percent to $324.61 million, with gross profit margin rising to 25.5 percent from 24.8 percent, which the company attributed to improved store inventory shrink performance and lower internal supply chain costs. Income from operations increased 38.6 percent to $28.51 million, and net income rose 31.4 percent to $22.21 million.
“Our people, process and technology investments continue to enhance customer value and convenience while supporting greater efficiency across our operations, including stores, supply chain, manufacturing and the Store Support Center,” Weis said. “We are grateful to our associates for their commitment to our customers and our business.”
Year-to-date comps down
For the 39-week year-to-date period, comparable store sales increased 1.9 percent; down 0.1 percent excluding fuel. Total revenue increased 4.1 percent to $3.81 billion and net income was up 18.1 percent to $72.92 million. Year-to-date IRA-related pharmacy pricing headwinds totaled approximately $32.75 million.
The board declared a quarterly cash dividend of 34 cents per share, payable Nov. 23 to shareholders of record as of Nov. 9.
Founded in 1912, Weis Markets operates 201 stores in Pennsylvania, Maryland, Delaware, New Jersey, New York, West Virginia and Virginia.