Publix Super Markets Inc.

08/01/2025 | Press release | Distributed by Public on 08/01/2025 12:12

Quarterly Report for Quarter Ending June 28, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The objective of this section is to provide a summary of material information relevant to enhancing the stockholders' understanding of the financial condition and results of operations of the Company. Following is an analysis of the financial condition and results of operations of the Company for the three and six months ended June 28, 2025 as compared with the three and six months ended June 29, 2024. This information should be read in conjunction with the Company's condensed consolidated financial statements and accompanying notes and the Annual Report.
Overview
The Company is engaged in the retail food industry and as of June 28, 2025 operated 1,411 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, North Carolina, Virginia and Kentucky. The Company has no other significant lines of business or industry segments. For the six months ended June 28, 2025, 25 supermarkets were opened (including four replacement supermarkets) and 47 supermarkets were remodeled. Four supermarkets were closed during the period. The replacement supermarkets that opened during the six months ended June 28, 2025 replaced four supermarkets closed in a previous period. The four supermarkets closed in 2025 will be replaced on site in a subsequent period. In the normal course of operations, the Company replaces supermarkets and closes supermarkets that are not meeting performance expectations. The impact of future supermarket closings is not expected to be material.
Results of Operations
Sales
Sales for the three months ended June 28, 2025 were $15.6 billion as compared with $14.5 billion for the three months ended June 29, 2024, an increase of $1.1 billion or 7.3%. The increase in sales for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was primarily due to new supermarket sales and a 6.0% increase in comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets). The Company estimates the increase in sales for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was $150 million or 1.0% higher due to the effect of the Easter holiday being in the second quarter in 2025 and in the first quarter in 2024. Comparable store sales for the three months ended June 28, 2025 increased primarily due to the impact of inflation on product costs and the effect of the Easter holiday timing. Sales for supermarkets that are replaced on site are classified as new supermarket sales since the replacement period for the supermarket is generally 12 to 15 months.
Sales for the six months ended June 28, 2025 were $31.4 billion as compared with $29.6 billion for the six months ended June 29, 2024, an increase of $1.8 billion or 6.2%. The increase in sales for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was primarily due to new supermarket sales and a 5.0% increase in comparable store sales. Comparable store sales for the six months ended June 28, 2025 increased primarily due to the impact of inflation on product costs.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 25.5% and 25.6% for the three months ended June 28, 2025 and June 29, 2024, respectively. The decrease in gross profit as a percentage of sales for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was primarily due to the relative sales growth of pharmacy products, partially offset by cost improvements, including a decrease in distribution costs as a percentage of sales. Gross profit as a percentage of sales was 25.8% and 25.7% for the six months ended June 28, 2025 and June 29, 2024, respectively. The increase in gross profit as a percentage of sales for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was primarily due to cost improvements, including a decrease in distribution costs as a percentage of sales, partially offset by the relative sales growth of pharmacy products.
Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 18.8% and 19.1% for the three months ended June 28, 2025 and June 29, 2024, respectively. Operating and administrative expenses as a percentage of sales were 18.6% and 18.9% for the six months ended June 28, 2025 and June 29, 2024, respectively. The decrease in operating and administrative expenses as a percentage of sales for the three and six months ended June 28, 2025 as compared with the three and six months ended June 29, 2024 was primarily due to a decrease in payroll costs as a percentage of sales.
Operating profit
Operating profit as a percentage of sales was 7.4% and 7.2% for the three months ended June 28, 2025 and June 29, 2024, respectively. The increase in operating profit as a percentage of sales for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was due to the decrease in operating and administrative expenses as a percentage of sales, partially offset by the decrease in gross profit as a percentage of sales. Operating profit as a percentage of sales was 7.9% and 7.6% for the six months ended June 28, 2025 and June 29, 2024, respectively. The increase in operating profit as a percentage of sales for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was due to the increase in gross profit as a percentage of sales and the decrease in operating and administrative expenses as a percentage of sales.
Investment income (loss)
Investment income for the three months ended June 28, 2025 and June 29, 2024 was $560 million and $151 million, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, investment income would have been $114 million and $108 million for the three months ended June 28, 2025 and June 29, 2024, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, the increase in investment income for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was primarily due to the increase in interest and dividend income.
Investment income for the six months ended June 28, 2025 and June 29, 2024 was $458 million and $646 million, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, investment income would have been $235 million and $216 million for the six months ended June 28, 2025 and June 29, 2024, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, the increase in investment income for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was primarily due to the increase in interest and dividend income.
Income tax expense
The effective income tax rate was 21.2% and 21.1% for the three months ended June 28, 2025 and June 29, 2024, respectively. The effective income tax rate was 21.0% and 20.9% for the six months ended June 28, 2025 and June 29, 2024, respectively. The effective income tax rate for the three and six months ended June 28, 2025 as compared with the three and six months ended June 29, 2024 remained relatively unchanged.
Net earnings
Net earnings were $1.4 billion or $0.42 per share and $972 million or $0.29 per share for the three months ended June 28, 2025 and June 29, 2024, respectively. Net earnings as a percentage of sales were 8.8% and 6.7% for the three months ended June 28, 2025 and June 29, 2024, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, net earnings would have been $1.0 billion or $0.32 per share and 6.7% as a percentage of sales for the three months ended June 28, 2025 and $940 million or $0.29 per share and 6.5% as a percentage of sales for the three months ended June 29, 2024. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, the increase in net earnings as a percentage of sales for the three months ended June 28, 2025 as compared with the three months ended June 29, 2024 was primarily due to the increase in operating profit as a percentage of sales.
Net earnings were $2.4 billion or $0.73 per share and $2.3 billion or $0.71 per share for the six months ended June 28, 2025 and June 29, 2024, respectively. Net earnings as a percentage of sales were 7.6% and 7.9% for the six months ended June 28, 2025 and June 29, 2024, respectively. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, net earnings would have been $2.2 billion or $0.68 per share and 7.1% as a percentage of sales for the six months ended June 28, 2025 and $2.0 billion or $0.61 per share and 6.8% as a percentage of sales for the six months ended June 29, 2024. Excluding the impact of net unrealized gains on equity securities in 2025 and 2024, the increase in net earnings as a percentage of sales for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was primarily due to the increase in operating profit as a percentage of sales.
Non-GAAP Financial Measures
In addition to reporting financial results for the three and six months ended June 28, 2025 and June 29, 2024 in accordance with GAAP, the Company presents net earnings and earnings per share excluding the impact of equity securities being measured at fair value with net unrealized gains and losses from changes in the fair value recognized in earnings (fair value adjustment). These measures are not in accordance with, or an alternative to, GAAP. The Company excludes the impact of the fair value adjustment since it is primarily due to temporary equity market fluctuations that do not reflect the Company's operations. The Company believes this information is useful in providing period-to-period comparisons of the results of operations.
Following is a reconciliation of net earnings to net earnings excluding the impact of the fair value adjustment for the three and six months ended June 28, 2025 and June 29, 2024:
Three Months Ended Six Months Ended
June 28, 2025 June 29, 2024 June 28, 2025 June 29, 2024
(Amounts are in millions, except per share amounts)
Net earnings $ 1,375 972 2,386 2,338
Fair value adjustment, due to net unrealized gain, on equity securities held at end of period (446) (43) (223) (430)
Income tax expense (1)
114 11 57 109
Net earnings excluding impact of fair value adjustment $ 1,043 940 2,220 2,017
Weighted average shares outstanding 3,258 3,296 3,258 3,296
Earnings per share excluding impact of fair value adjustment $ 0.32 0.29 0.68 0.61
(1)Income tax expense is based on the Company's combined federal and state statutory income tax rates.
Liquidity and Capital Resources
Cash and cash equivalents, short-term investments and long-term investments totaled $17.0 billion as of June 28, 2025, as compared with $15.9 billion as of December 28, 2024 and $15.2 billion as of June 29, 2024. The increase from the second quarter of 2024 to the second quarter of 2025 was primarily due to the increase in the fair value of investments.
Net cash provided by operating activities
Net cash provided by operating activities was $3.2 billion and $2.7 billion for the six months ended June 28, 2025 and June 29, 2024, respectively. The increase in net cash provided by operating activities for the six months ended June 28, 2025 as compared with the six months ended June 29, 2024 was primarily due to the increase in operating profit and the decrease in income taxes paid. Income taxes paid in 2024 includes payments for 2023 that were deferred due to Hurricane Idalia.
Net cash used in investing activities
Net cash used in investing activities was $2.0 billion and $1.7 billion for the six months ended June 28, 2025 and June 29, 2024, respectively. The primary use of net cash in investing activities for the six months ended June 28, 2025 was funding capital expenditures and net increases in investments. Capital expenditures for the six months ended June 28, 2025 totaled $1.0 billion. These expenditures were incurred in connection with the opening of 25 supermarkets (including four replacement supermarkets) and the remodeling of 47 supermarkets. Expenditures were also incurred for new supermarkets and remodels in progress, construction or expansion of warehouses, new or enhanced information technology hardware and software and the acquisition or development of shopping centers in which the Company operates. For the six months ended June 28, 2025, the payment for investments, net of the proceeds from the sale and maturity of investments, was $997 million.
Net cash used in financing activities
Net cash used in financing activities was $1.4 billion for the six months ended June 28, 2025 and June 29, 2024. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $708 million and $670 million for the six months ended June 28, 2025 and June 29, 2024, respectively. The Company currently repurchases common stock at the stockholders' request in accordance with the terms of the Company's Employee Stock Purchase Plan (ESPP), Non-Employee Directors Stock Purchase Plan (Directors Plan), 401(k) Plan and ESOP. The amount of common stock offered to the Company for repurchase is not within the control of the Company, but is at the discretion of the stockholders. The Company expects to continue to repurchase its common stock, as offered by its stockholders from time to time, at its then current value. However, with the exception of certain shares distributed from the ESOP, such purchases are not required and the Company retains the right to discontinue them at any time.
Dividends
The Company paid quarterly dividends on its common stock totaling $711 million or $0.218 per share and $685 million or $0.2075 per share during the six months ended June 28, 2025 and June 29, 2024, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2025 are expected to be approximately $1.5 billion, primarily related to new supermarkets, remodeling existing supermarkets, construction or expansion of warehouses, new or enhanced information technology hardware and software and the acquisition or development of shopping centers in which the Company operates. Capital expenditures are expected to be funded with internally generated funds or liquid assets. This capital program is subject to continuing change and review.
Cash requirements
In 2025, cash requirements for operations, capital expenditures, common stock repurchases and dividend payments are expected to be funded with internally generated funds or liquid assets. Based on the Company's financial position, it is expected that short-term and long-term borrowings would be available to support the Company's liquidity requirements, if needed.
Forward-Looking Statements
Certain information provided by the Company in this Quarterly Report on Form 10-Q (Quarterly Report) may be forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Forward-looking information includes statements about the future performance of the Company and is based on management's assumptions and beliefs in light of the information currently available to them. When used, the words "plan," "estimate," "project," "intend," "expect," "believe," "will" and other similar expressions, as they relate to the Company, are intended to identify such forward-looking statements. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those statements including, but not limited to, competitive practices and pricing in the food and drug industries generally and particularly in the Company's principal markets; results of programs to increase sales, including private label sales; results of programs to control or reduce costs; changes in buying, pricing and promotional practices; changes in shrink management; supply chain disruptions; changes in the general economy, including an economic downturn associated with inflation, increased interest rates, international conflicts, acts of terrorism or other disruptions; changes in trade policies, including tariffs; changes in consumer spending; changes in population, employment and job growth in the Company's principal markets; impacts of a public health crisis, geopolitical conditions or other significant catastrophic events; impacts of cybersecurity threats, including an intrusion into, compromise of or disruption in the Company's information technology systems; and other factors affecting the Company's business within or beyond the Company's control. These factors include changes in interest or inflation rates; changes in federal, state and local laws and regulations; adverse determinations with respect to litigation or other claims; ability to recruit and retain employees; ability to construct new supermarkets or complete remodels as rapidly as planned; increases in product costs; and increases in operating costs including, but not limited to, labor, fuel and energy costs, debit and credit card fees and pharmacy fees. Other factors and assumptions not identified above could also cause the actual results to differ materially from those set forth in the forward-looking statements. Except as may be required by applicable law, the Company assumes no obligation to publicly update these forward-looking statements.
Publix Super Markets Inc. published this content on August 01, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 01, 2025 at 18:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]