Safeway Stores, Inc., the nation's largest food retail company, is experiencing a rapid climb in profits during the early months of 1977, president William S. Mitchell told the firm's annual meeting of stock holders in Baltimore yesterday.
But food prices also expected to rise throughout the year - perhaps by 7 per cent on an annual basis, Mitchell added.
"Unfavourable weather conditions have compounded a situation where costs were already under strong upward pressure from spiraling wage rates, energy problems, taxation and government spending," he said.
Mitchell predicted that there will be "some self-righteous finger pointing" in coming months from individuals who will claim that prices are being kept high by "a handful of unsavory 'middlemen' who drain off the profits." In fact, he said, one of every five workers employees in the food system can be classified as middlemen.
Last year, the Safeway officer added, U.S. consumers spent 13 per cent of their disposable income on food eaten at home.
For Safeway, that helped bring about record sales of $10.44 billion, up 7.5 per cent form 1975. However profits declined to $105.6 million ($4.07 a share) from $148.6 million($148.6 million ($5.74), which Mitchell said yesterday was to be expected.
In addition to price competition in many areas served by Safeway, he cited large increases in operating costs as factors in the profit setback. "All in all, it was a difficult year and I am somewhat relieved that it is behind us."
In the current year, Mitchell said profits for the first quarter were up 24 per cent to 85 per cents a share compared with 69 cents in 1976 period. First quarter sales increased by 8 per cent and in the four weeks April 23, sales and profits are both runningahead of last year, profits more so than sales," he said.