Publix Super Markets Inc.

08/03/2026 | Press release | Distributed by Public on 08/03/2026 12:19

Quarterly Report for Quarter Ending June 27, 2026 (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 27, 2026 as compared with the three and six months ended June 28, 2025. 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, operating 1,440 supermarkets in the southeast region of the United States as of June 27, 2026. The Company has no other significant lines of business or industry segments. For the six months ended June 27, 2026, 16 supermarkets were opened (including four replacement supermarkets) and 56 supermarkets were remodeled. Eight supermarkets were closed during the period. The replacement supermarkets that opened during the six months ended June 27, 2026 replaced one supermarket closed in 2026 and three supermarkets closed in a previous period. Six supermarkets closed in 2026 will be replaced on site in a subsequent period and one supermarket will not be replaced. 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 27, 2026 were $15.7 billion as compared with $15.6 billion for the three months ended June 28, 2025, an increase of $163 million or 1.0%. Sales for the six months ended June 27, 2026 were $31.9 billion as compared with $31.4 billion for the six months ended June 28, 2025, an increase of $482 million or 1.5%. The increase in sales for the three and six months ended June 27, 2026 as compared with the three and six months ended June 28, 2025 was primarily due to new supermarket sales, partially offset by pharmacy reimbursement changes effective January 1, 2026. Beginning in January 2026, reduced drug prices went into effect for 10 drugs through the Medicare Drug Price Negotiation Program (Negotiation Program). The Negotiation Program was established by the Inflation Reduction Act of 2022 to negotiate the price, referred to as the maximum fair price (MFP), for certain drugs. The impact of the MFP change resulted in a decrease in sales. Additionally, sales were negatively affected by economic conditions impacting consumer spending.
Comparable store sales (supermarkets open for the same weeks in both periods, including replacement supermarkets) for the three months ended June 27, 2026 as compared with the three months ended June 28, 2025 decreased 0.5%. Comparable store sales for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 decreased 0.3%. The decrease in comparable store sales for the three and six months ended June 27, 2026 as compared with the three and six months ended June 28, 2025 was primarily due to the impact of the MFP change and economic conditions impacting consumer spending. 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.
Gross profit
Gross profit (sales less cost of merchandise sold) as a percentage of sales was 25.6% and 25.5% for the three months ended June 27, 2026 and June 28, 2025, respectively. The increase in gross profit as a percentage of sales for the three months ended June 27, 2026 as compared with the three months ended June 28, 2025 was primarily due to the impact of the MFP change which increased gross profit as a percentage of sales, partially offset by the relative sales growth of pharmacy products which decreased gross profit as a percentage of sales. Gross profit as a percentage of sales was 25.8% for the six months ended June 27, 2026 and June 28, 2025. Gross profit as a percentage of sales for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 was unchanged primarily due to the impact of the MFP change which increased gross profit as a percentage of sales, offset by the relative sales growth of pharmacy products which decreased gross profit as a percentage of sales. The MFP change reduces both sales and cost of sales and does not have a significant impact on gross profit dollars.
Operating and administrative expenses
Operating and administrative expenses as a percentage of sales were 19.5% and 18.8% for the three months ended June 27, 2026 and June 28, 2025, respectively. Operating and administrative expenses as a percentage of sales were 19.1% and 18.6% for the six months ended June 27, 2026 and June 28, 2025, respectively. The increase in operating and administrative expenses as a percentage of sales for the three and six months ended June 27, 2026 as compared with the three and six months ended June 28, 2025 was primarily due to the decrease in sales from the MFP change and increases in facility costs as a percentage of sales and payroll costs as a percentage of sales.
Operating profit
Operating profit as a percentage of sales was 6.9% and 7.4% for the three months ended June 27, 2026 and June 28, 2025, respectively. The decrease in operating profit as a percentage of sales for the three months ended June 27, 2026 as compared with the three months ended June 28, 2025 was due to the increase in operating and administrative expenses as a percentage of sales, partially offset by the increase in gross profit as a percentage of sales. Operating profit as a percentage of sales was 7.5% and 7.9% for the six months ended June 27, 2026 and June 28, 2025, respectively. The decrease in operating profit as a percentage of sales for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 was primarily due to the increase in operating and administrative expenses as a percentage of sales.
Investment income (loss)
Investment income for the three months ended June 27, 2026 and June 28, 2025 was $943 million and $560 million, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, investment income would have been $144 million and $114 million for the three months ended June 27, 2026 and June 28, 2025, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, the increase in investment income for the three months ended June 27, 2026 as compared with the three months ended June 28, 2025 was due to the increase in interest and dividend income.
Investment income for the six months ended June 27, 2026 and June 28, 2025 was $609 million and $458 million, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, investment income would have been $277 million and $235 million for the six months ended June 27, 2026 and June 28, 2025, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, the increase in investment income for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 was primarily due to the increase in interest and dividend income.
Income tax expense
The effective income tax rate was 19.8% and 21.2% for the three months ended June 27, 2026 and June 28, 2025, respectively. The effective income tax rate was 19.9% and 21.0% for the six months ended June 27, 2026 and June 28, 2025, respectively. The decrease in the effective income tax rate for the three and six months ended June 27, 2026 as compared with the three and six months ended June 28, 2025 was primarily due to the increased impact of permanent deductions and credits relative to earnings before income tax expense.
Net earnings
Net earnings were $1.7 billion or $0.52 per share and $1.4 billion or $0.42 per share for the three months ended June 27, 2026 and June 28, 2025, respectively. Net earnings as a percentage of sales were 10.5% and 8.8% for the three months ended June 27, 2026 and June 28, 2025, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, net earnings would have been $1.1 billion or $0.33 per share and 6.7% as a percentage of sales for the three months ended June 27, 2026 and $1.0 billion or $0.32 per share and 6.7% as a percentage of sales for the three months ended June 28, 2025. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, net earnings as a percentage of sales for the three months ended June 27, 2026 as compared with the three months ended June 28, 2025 was unchanged primarily due to the impact of the decrease in the effective tax rate and the increase in interest and dividend income, partially offset by the decrease in operating profit as a percentage of sales.
Net earnings were $2.5 billion or $0.76 per share and $2.4 billion or $0.73 per share for the six months ended June 27, 2026 and June 28, 2025, respectively. Net earnings as a percentage of sales were 7.7% and 7.6% for the six months ended June 27, 2026 and June 28, 2025, respectively. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, net earnings would have been $2.2 billion or $0.69 per share and 6.9% as a percentage of sales for the six months ended June 27, 2026 and $2.2 billion or $0.68 per share and 7.1% as a percentage of sales for the six months ended June 28, 2025. Excluding the impact of net unrealized gains on equity securities in 2026 and 2025, the decrease in net earnings as a percentage of sales for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 was primarily due to the decrease in operating profit as a percentage of sales, partially offset by the impact of the decrease in the effective tax rate and the increase in interest and dividend income.
Non-GAAP Financial Measures
In addition to reporting financial results for the three and six months ended June 27, 2026 and June 28, 2025 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 27, 2026 and June 28, 2025:
Three Months Ended Six Months Ended
June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025
(Amounts are in millions, except per share amounts)
Net earnings $ 1,657 1,375 2,451 2,386
Fair value adjustment, due to net unrealized gain, on equity securities held at end of period (799) (446) (332) (223)
Income tax expense (1)
203 114 84 57
Net earnings excluding impact of fair value adjustment $ 1,061 1,043 2,203 2,220
Weighted average shares outstanding 3,211 3,258 3,213 3,258
Earnings per share excluding impact of fair value adjustment $ 0.33 0.32 0.69 0.68
(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 $18.5 billion, $17.7 billion and $17.0 billion as of June 27, 2026, December 27, 2025 and June 28, 2025, respectively. The Company's operations have historically provided the necessary liquidity to fund operations and invest in long-term growth.
Net cash provided by operating activities
Net cash provided by operating activities was $3.7 billion and $3.2 billion for the six months ended June 27, 2026 and June 28, 2025, respectively. The increase in net cash provided by operating activities for the six months ended June 27, 2026 as compared with the six months ended June 28, 2025 was primarily due to the timing of purchases of inventories and the decrease in income taxes paid.
Net cash used in investing activities
Net cash used in investing activities was $2.2 billion and $2.0 billion for the six months ended June 27, 2026 and June 28, 2025, respectively. The primary use of net cash in investing activities for the six months ended June 27, 2026 was funding capital expenditures and net increases in investments. Capital expenditures for the six months ended June 27, 2026 totaled $1.5 billion. These expenditures were incurred in connection with the opening of 16 supermarkets (including four replacement supermarkets) and the remodeling of 56 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 27, 2026, the payment for investments, net of the proceeds from the sale and maturity of investments, was $796 million.
Net cash used in financing activities
Net cash used in financing activities was $1.7 billion and $1.4 billion for the six months ended June 27, 2026 and June 28, 2025, respectively. The primary use of net cash in financing activities was funding net common stock repurchases and dividend payments. Net common stock repurchases totaled $957 million and $708 million for the six months ended June 27, 2026 and June 28, 2025, 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 $729 million or $0.2265 per share and $711 million or $0.218 per share during the six months ended June 27, 2026 and June 28, 2025, respectively.
Capital expenditures projection
Capital expenditures for the remainder of 2026 are expected to be approximately $1.1 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
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 government assistance, such as unemployment and food programs; changes in the general economy, including an economic downturn associated with inflation, increased interest rates, government shutdowns, 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 events; impacts of cybersecurity threats, including an intrusion into, compromise of or disruption in the Company's information technology systems; use of artificial intelligence and related technologies; 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, including tax laws; 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 03, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 03, 2026 at 18:19 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]