Profits of Giant Food Inc. fell 10 percent in the three months ended Nov. 1 even though sales volume jumped 18 percent, the Landover-based food chain said yesterday.
Earnings for the third fiscal quarter were $3.16 million (65 cents a share) compared with $3.52 million (71 cents) a year earlier, while sales increased to $332 million from $282 million.
The quarterly profits were 0.95 percent of sales compared with 1.25 percent last year and Giant's historic level of profitability which is between 1 percent and 1.5 percent.
At the same time, the recent quarter was a better period in terms of profitability than the previous three months, when profits declined to 0.47 percent of sales. A statement from Giant yesterday attributed the rebound in the latest quarter, in part to expiration of a voluntary 22-week price freeze on some 400 private-label products and selected meat and dairy items, on which cost increases had not been reflected earlier.
In the nine months ended Nov. 1, Giant profits declined 30 percent to $8 million ($1.64) from $11.4 million ($2.28) as sales increased by 17.5 percent to a record $969 million.
"Giant continues to be faced with increasing costs for product, supplies, labor, energy and construction," the company stated. One attempt to develop new efficiency has been experimentation by Giant with two "hybrid" stores that feature a more limited product selection and the controversial absence of actual price marks on goods that are scanned at automatic checkouts.
While it is premature for any conclusions about these stores, Giant said, "the company is pleased with initial response to this concept, and will continue to adapt and innovate as it tests the concept." Indeed, company officials have been quoted as saying many of the company's supermarkets could be switched to the new hybrid variety, depending on results of the experimentation.
Currently, Giant operates 124 food and food-pharmacy units compared with 120 a year earlier. The company also owns the Pants Corral jeans chain.
Maryland Cup Corp., a manufacturer of paper and plastic food service products, reported earnings rose in the year ended Sept. 30 to $26 million ($3.89 a share) from $491 million ($3.33) a year ago, not counting a one-time gain in the previous fiscal period of $6 million because of an accounting change.
Sales of the Owings Mills firm rose 18 percent to a record $579 million and President Samuel Shapiro said all markets contributed to the sale growth, with dairy and food packaging the biggest gainers.
Washington Homes Inc., a Waldorf builder, said earnings for the first fiscal quarter ended Oct. 31 fell to $8,552 (1 cent a share) from $50,369 (4 cents) a year ago as sales dipped to $7.2 million from $8.7 million. All incumbent directors were reelected at the annual meeting yesterday.
PHH Group Inc., a Hunt Valley, Md., management services and leasing company, reported record profits in the six months ended Oct. 31 of $10 million ($1.55 a share) compared with $7.4 million ($1.16) last year. Sales rose 48 percent to $194 million.