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For the second straight year, the retail food industry increased net profits (1.36 percent) and operating income (3.22 percent), showing the industry’s resilience in a weak economy, according to the 2001-2002 Annual Financial Review released today by the Food Marketing Institute (FMI). The profit and income figures are up from 1.25 percent and 3.03 percent, respectively, in fiscal year 2000-2001.

“The industry’s financial performance is most impressive considering the unprecedented level of competition and minimal inflation,” said FMI President and CEO Tim Hammonds. The portion of family income spent on food-at-home continued a half-century decline to only 6.0 percent in 2001, according to the Economic Research Service of the U.S. Department of Agriculture.

“Food retailers are using technology, smart purchasing and inventory controls to reduce operating costs,” Hammonds said. “More rigorous management practices reduced inventories to a record low of 21.78 percent of assets — proof that the industry is improving efficiency in an area that has long needed tighter controls.” Comparable figures exceeded 26 percent 10 years ago and 35 percent in the early 1980s, according to previous editions of the Annual Financial Review. FMI began tracking industry financial performance in 1972.

The industry is also meeting the continuing consumer demand for convenience, evident in the just-released FMI report Facts About Store Development, 2002. “Although new store construction was down, retailers increased one-stop-shopping opportunities in remodeling, adding pharmacies, in-store banks, prepared takeout food and gasoline pumps,” Hammonds said.

Capital expenditures decreased slightly in the most recently fiscal year to 2.79 percent of sales, from 2.89 percent, according to the Annual Financial Review. “This most likely reflects more conservative investment strategies and more focused spending on the products and services that consumers demand in the current environment.”

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