The Most Profitable Grocery Stores (WMT, KR)

The United States is so large and diversified that even its “national” grocery chains don’t all operate in every state. Take Kroger for example. The grocery company is one of the largest in the world and it only has stores in 34 states. In 2014, U.S. supermarkets had combined sales of over $638 billion. Let’s look at the largest six chains and see how profitable they were in the 2014 fiscal year.

Publix is a grocery store operating in the south-eastern United States. It is a private, employee-held company that consists of around 1,100 stores. In 2014, the company had over $30 billion in sales and realized a $1.7 million profit (about 5.7% of sales). Because of Publix’s generous benefits plan, which includes stock gifting and 401(k) matching, employee satisfaction is high and the company is considered one of the top employers in America, which in turn leads to motivated employees and low employee turnover.

What can be said about Wal-Mart (WMT) that isn’t already known? Wal-Mart grew from a tiny store in Arkansas in 1962 into one of the largest retailers in the world today and, in the process, made multiple members of the Walton family permanent mentions on every richest person list. Wal-Mart is absolutely huge with a market cap of $244 billion and worldwide revenue of $473 billion in 2014. The company’s financials are split into three segments: Wal-Mart USA, Wal-Mart International and Sam’s Club.

In 2014, Wal-Mart USA had $279 billion in revenue and posted a profit of $4.85 per share on 3.27 billion shares. Sam’s Club, a warehouse-style store contributed $57.1 billion in revenue or just over 12% of Wal-Mart’s total revenue.

Kroger (KR), as mentioned in the introduction, is one of the top grocery retailers in the world and, in 2013, had the highest supermarket sales in the country by far. Despite this, Kroger has only 2,424 stores in 34 states and lots of room to grow. Kroger has non-supermarket subsidiaries around the country (jewelry stores, convenience stores, and Fred Meyers, to name a few) which contribute to the company’s revenue and profit, and in 2014 the company had $108 billion in revenue and a profit of $3.44 a share.

Albertsons is a company that you might be hearing about these days because of their recently approved acquisition of Safeway. While Albertsons is now a privately-held company, analysts estimate its 2014 revenue at $23 billion and, this year promises to be even more exciting. In 2014, Safeway had $36 billion in revenue and turned a per-share profit of $0.44 on its 230.7 million shares.

Delhaize Group (DEG) is a Belgian company for which 63% of revenue comes from the United States. The company operates in six other countries and is known under the Hannaford and Food Lion banners here in the United States. The company currently operates 1,295 stores throughout the country and had €13.36 million (US$14.62 million) of revenue and €542 million (US$593 million) in profit in 2014.

SuperValu (SVU) is a national chain with over 3,500 corporate and licensed stores in the United States. The largest brand is Save-a-Lot which had over 7 million square feet of retail space in 2014. The company also operates smaller regional banners and acts as a distributor for independent grocers. Most recently, the company had $192 million in net earnings which translates into $0.45 per share in profit.

While looking for companies that have the highest profit isn’t the goal for all investors, the six profitable grocery companies listed above are the largest in the United States. Unsurprisingly, most of the companies are American, with only Delhaize being operated internationally, and all have a long history of profitability. Despite some stores also profiting from sales in other sectors, these six companies are proof that there’s still money to be made from selling meat and potatoes.