Soft Economic Conditions Hit Unified Grocers Q3 Sales, Profits

Continued soft economic conditions and unemployment levels within its various operating areas drove a decrease in third-quarter sales for regional wholesaler Unified Grocers, Inc.
"Uncertain economic conditions continue to impact consumer spending at many of our members' retail stores," said Al Plamann, president and CEO of Unified. "Sales volumes are down because consumers are still cautious about what they are spending and are continuing to trade down in many product categories.”
Unified reported net sales of $980.1 million for its third fiscal quarter ended July 3, 2010, down 1.2 percent from last year’s $992.5 million for the third fiscal quarter ended June 27, 2009. Net earnings were $1.3 million for the quarter, down from $3.9 million in 2009. Earnings before patronage dividends and income taxes decreased 22.2 percent and were $6.5 million for 2010, compared to $8.4 million last year.
The decline in earnings was largely attributable to volatile equity markets that negatively impacted certain life insurance contracts maintained by Unified, resulting in a $2.8 million decline when compared to the same period last year. Lower sales volume and non-cash expense increases in pension and post retirement expenses also contributed to the decline in earnings. Partially offsetting these declines were the impacts of operating expense reductions in excess of the lower sales levels.
"Though our earnings for the quarter and fiscal year at Unified are in line with our budget, we continue to focus on expense control in all of our operations in an effort to keep our distribution network as efficient and effective as possible," said Plamann. "Our retailers continue to open new stores and refresh existing facilities. There are many opportunities for our independent retailers in all of our marketplaces."
On a year-to-date basis, net earnings decreased to $8 million (down 21.1 percent) while sales and earnings before patronage dividends and income taxes also decreased to $2.9 billion (down 1.7 percent) and $22.2 million (down 22.7 percent) respectively. A major factor impacting the decline in year-to-date earnings before patronage dividends and income taxes was the unusually high level of food inflation and other vendor-related support during fiscal 2009 that has not been present thus far in 2010, according to Unified.
Unified Grocers is a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the western United States.

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