Grocery Sales Rise, but Profit Pressure Continues

Walmart still dominates the sector.

October 22, 2019

BENTONVILLE, Ark.—The grocery industry registered third quarter sales at 4% higher year-over-year, according to the U.S. Department of Commerce, but that hasn’t translated into a boost in profits, CNBC reports. The Commerce Department also noted that grocery sales accelerated at a quicker pace than the 2.6% bump during the second quarter and a 2.5% rise in the first quarter.

With a 22% slice, Walmart continues to lead the U.S. grocery industry, estimated at $847 billion, according to analyst Andrew Wolf with Loop Capital Markets. The retailer’s same-store sales have been consistently outperforming other supermarket chains since 2017. However, rivals are closing the gap with a rise in same-store sales.

Food prices have been dis-inflating grocery gross margins, which hits Walmart hard, Wolf wrote in a research note. Gross margins also fell for Publix and Ahold during the second quarter, but Kroger stayed steady and Albertsons improved. Wolf wrote that he anticipated the same outcome for the third quarter.

Advertisement
Advertisement
Advertisement