Pinched by the same rising grocery prices about which housewives complain, Giant Food Inc. reported yesterday its pre-tax operating profits fell in the latest quarter, despite a 15 percent increase in sales.
Giant's pretax income for the 12 weeks ended Nov. 4 was $4.46 million, down from $4.71 million. Because increased investment tax credits lowered the company's tax rate, net earnings were about the same as last year - $2.64 million (79 cents a share) vs. $2.62 million (80 cents).
Sales increased to $425 million from $213 million in the same period a year ago.
The sharp increase in sales reflects both inflation - estimated at 7 percent in the grocery business - and Giant's increasing share of the food business in the Washington and Baltimore markets.
Giant is the largest food chain in the combined Baltimore-Washington markets, but is second to Safeway in the Washington area.
A Giant spokesperson said the lower earnings were "attributed to the company's inability to fully pass on its increased costs of doing business."
Both operating costs and food prices went up, but part of the increases came out of the company's profits rather than the customer's pocketbook. Absorbing some cost increases, however, kept the chain's prices competitive and apparently contributed to the sales gains.
As a percentage of sales, Giant's earnings declined from 1.23 percent to 1.08 percent, indicating the company made 15 cents less on each 100 worth of groceries - or a $1.08 profit.
For the first 36 weeks of its fiscal year, Giant's earned $8.95 million ( $2.)9 a share), up from $8.45 million ($2.57) as sales increased to $720 million from $624 million.