New stores, product price inflation and an Easter sales calendar shift powered Publix Super Markets to robust sales gains in its fiscal second quarter.
For the three-month period ending June 29, the Lakeland, Fla.-based retailer saw sales improve by 6.8% to $9.3 billion, with comparable-store sales improving by 4.8%. Publix attributed approximately $105 million in sales in the quarter, or about 1.2% comps, to the Easter holiday, which fell in the second quarter this year and the first quarter a year ago. Increased product costs made up the rest of the same-store sales lift.
Gross profit as a percentage of sales was 27.1% for the quarter, down from 27.3% in last year’s second quarter. Costs were up slightly due to increased employee payroll costs as a percentage of sales.
Operating profit as a percentage of sales was 7.3% for the three-month quarter, unchanged from 2018’s second quarter.
Net earnings of $661.1 million for the period increased by 7.3%.
Publix said its stock price decreased from $44.75 per share to $44.10 per share due to market adjustments. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors.
“I’m pleased that our Publix associates delivered good operating results,” Publix CEO Todd Jones said in a statement. “We continue to provide premier service to help offset the challenges in the stock market.”
In retail, timing can be everything. Take, for example, GreenWise Market, the natural, organic and specialty format rolled out more than a decade ago by Lakeland, Fla.-based Publix Super Markets.
When its first stores opened in 2007, GreenWise was right on time to benefit from exploding interest in natural and organic food; but in retrospect, it was probably a little too early to capitalize on how consumers would ultimately prefer to shop for the products. And when a punishing recession hit shortly after the first few locations went up, it was clear the timing wasn’t quite right for GreenWise—at least as initially envisioned.
But much has changed since then. Publix, while strengthening its dominant position on Florida’s supermarket scene, has instead witnessed a rash of new competition espousing their own takes on healthy eating trends, specialty foods, younger shoppers and the “in-between” trips that have become more prevalent in shopping patterns today. Those pop-in trips, sources say, triggered Publix to revisit the GreenWise concept. The first of at least 10 planned GreenWise units debuted late last year in Tallahassee, Fla. A second new GreenWise opened May 23 in Mount Pleasant, S.C.
Publix officials describe GreenWise as a store for natural and specialty shoppers who are looking for new and interesting products “while setting the stage to provide a uniquely different shopping experience.”
A key difference between GreenWise 2.0 and its predecessors, visitors say, is that Publix is not rolling out the new one with the idea of it becoming a primary shopping vehicle. Rather, they say, it’s a store that designed to complement a primary shop that’s likely already being done at Publix.
Ashley Kritzer, a reporter covering retail and real estate with the Tampa Bay Business Journal, in an interview said she believes Publix was “10 years too early” with the initial GreenWise stores but needed to adjust after 2012, when a competitive incursion from Trader Joe’s seemed to ignite a specialty-grocer rush to the Sunshine State.
Since then, Trader Joe’s has opened nearly 20 stores in Florida; Kroger’s Lucky’s Market brand has opened more than a dozen; Sprouts Farmer’s Market has opened nine stores and Earth Fare and The Fresh Market have rolled out new locations, as has the food-focused convenience chain Wawa. None of these stores are aimed directly at Publix, sources note, but rather on trips that Publix shoppers might also make.
“Consider the fact there are around 50 Lucky’s, Sprouts and Earth Fare units that have either recently been built or [are] in some form of development across Florida. If this pace continues for 36 months, you would have the beginnings of a material impact,” says Mark Thompson, an Orlando, Fla.-based real estate broker. “Publix says, ‘Great—we recognize the modern consumer is shopping two grocery stores a week. No problem: We’ll give you that second grocery store, and in some cases, we’ll put it in the same plaza
Visitors say GreenWise strikes a simple and stylish vibe, with a mix of health and indulgence for specialty shoppers.
“What’s most interesting to me is I went in thinking that this will feel like a Lucky’s or an Earth Fare, but what Publix was able to do was a make a store that doesn’t feel like any of those, and it doesn’t feel like a Publix,” Kritzer says. “It feels like its own entity. It is very minimal in design, very chic, but also with a lot of little touches that are made for Instagram, like some of the foods in the prepared section.”
Publix arranged the store in zones including Care (vitamins, nutrition products, aromatherapy and body care); Cuts (meat and seafood including specialties such as store-made sausage and seasoned bacon); Eats (deli and prepared foods); Pours (craft beers and tap wines, locally roasted coffees, kombuchas, acai bowls and smoothies); and Finds (specialty departments such as cheeses, olives, wines, imported specialty items and other items for entertaining including wine and beer). Customers can relax in a mezzanine lounge or take a drink to shop—carts are outfitted with cupholders.
Other than carrying its namesake brand, GreenWise private brands can also be found at Publix stores; the store makes no overt effort to promote an association with its parent, which is another change from the previous versions known formally as Publix GreenWise Markets. The Eats section, for example, makes artisan sandwiches but doesn’t offer its sister’s famous Pub Subs.
Publix, which built a reputation for service at its namesake supermarkets, has a somewhat different interpretation at GreenWise, encouraging workers to share their knowledge of, and enthusiasm for, the items they sell—and dress in black tops and blue jeans.
A loyalty rewards program allows shoppers to designate a favorite charity to benefit on every store visit; they check in and receive personalized offers while providing the company with data on trends.
And though early reviews on online sites such as Yelp have been overwhelmingly positive, Publix will keep a close eye on what works at the store as additional sites roll out.
“The goal of the store is to evolve with customers,” Maria Brous, a spokeswoman for Publix, told the Tampa Bay Business Journal. “So it will give us real-time information that we can share. There’s always an opportunity for things you learn in one store to be transferred to another, and this really is a unique environment.”
Even the traditional sales flyer got a radical, millennial-friendly redesign at GreenWise. A recent issue featured a stark blow-up of asparagus stalks as though rendered through Instagram’s “Moon” filter and splashes of lavender on black and white.
Publix has announced nine planned locations for new GreenWise stores in addition to the Tallahassee debut. Thompson says announced sites share some demographic characteristics—notably income in surrounding areas—with their specialty competitors. But so far, they do not appear as though they would share customers.
“In addition to a similar-sized footprint, the known GreenWise pipeline’s average household income is consistent with Trader Joe’s, Sprouts and TFM’s at $95,000. However, when you look at the GreenWise development pipeline, these banners are nearly absent from the 3-mile competitive landscape, with only four competitive stores within 3 miles of the entire pipeline,” Thompson said. “What you do see is 20 Publix locations in total surrounding these new stores. A preemptive strike to absorb market potential from future would-be competitors would be a reasonable thesis.”