03/05/2018

Publix's $1.5B plan to rule food retail

Executive Editor

Over the past few years Publix has been snapping up commercial real estate as the grocer continues to grow its retail footprint in order to block out competitors.

Publix Supermarkets plans to spend $1.5 billion in 2018 to remodel stores, build up its real estate portfolio and focus on technology.

The Florida-based grocer revealed in its 2017 annual report that its capital expenditures for 2018 are expected to total approximately $1.5 billion, primarily consisting of building new supermarkets, remodeling existing supermarkets, enhancing technology hardware and applications, and acquiring shopping centers with the company as the anchor tenant.

Over the past few years Publix has been snapping up commercial real estate as the grocer continues to grow its retail footprint in order to block out competitors.

Publix owned 31.8% of its stores last year, up from 29.1% in 2016. Publix has increased the percentage of company-owned stores it operates for 11 consecutive years, starting in 2007, when the company owned 11.2% of its stores and leased the rest.

Last year Publix created a new position of VP of real estate assets, and named Woody Rayburn to the role, in which he’ll be responsible for managing the company’s growing shopping center portfolio and leveraging and acquiring assets as investments for the company.

Rayburn began his Publix career in 1993 as manager of business analysis. He was promoted to asset manager in 2000 and to his current position, Director of Real Estate Assets, in 2003. Rayburn graduated from the University of Notre Dame with a bachelor’s of business administration in accounting. Rayburn also was a recipient of Publix’s President’s Award.

Rayburn's promotion comes after the company named Bob Balcerak as Vice President of Real Estate Strategy.

“We’ve increased our investment in real estate over the last several years as a better use of our capital resources,” Publix spokesman Brian West said in a statement. “As a result, our real estate department has seen a lot of growth.”

Last week Publix raised wages for its hourly employees and some managers. It also received national praise for its workplace culture and reported record earnings.

The grocery chain also increased its stock price by nearly 13% to $41.40.

“I’m delighted we had a significant increase in our stock price,” said Publix CEO & President Todd Jones. “I’m proud of our associate owners for their dedicated service to our customers and communities.”

Last month, Publix was ranked one of the top employers in the United States by job site Indeed. This ranking comes on the heels of Publix being named No. 1 in customer satisfaction among all retailers in the country.

Publix sales for the fourth quarter of 2017 were $8.9 billion, a 2.1% decrease from last year’s $9.1 billion, a 14-week period. Excluding the additional week in the fourth quarter of 2016, sales for the fourth quarter of 2017 would have increased 5%. Same store sales for the fourth quarter of 2017 increased 3.2%.

Net earnings for the fourth quarter of 2017 were $766.6 million, compared to $544.5 million in 2016, an increase of 40.8%. Earnings per share for the fourth quarter increased to $1.04 for 2017, up from $0.71 per share in 2016.

Net earnings and earnings per share were impacted by the passage of the Tax Cuts and Jobs Act of 2017. Excluding the impact of the Tax Act, net earnings would have been $542.4 million, a decrease of 0.4%, and earnings per share would have been $0.74. Net earnings and earnings per share also were impacted by the extra week in the fourth quarter of 2016.

Publix’s sales for the fiscal year ended Dec. 30 were $34.6 billion, a 1.6% increase from last year’s $34 billion. Excluding the additional week in 2016, sales for 2017 would have increased 3.5%. Same store sales for 2017 increased 1.7%.

Net earnings for 2017 were $2.3 billion, compared to $2 billion in 2016, an increase of 13.1%. Earnings per share increased to $3.04 for 2017, up from $2.63 per share in 2016. Excluding the impact of the Tax Act, net earnings would have been $2.1 billion, an increase of 2.1%, and earnings per share would have been $2.74.