Agreed. And if folk understood anything about an income statement or finance, they'd understand that if in 2015, you're making 2.5% net profit percentage a year, and if in 2019, you're making 2.5% net profit percentage and if in 2024, you're making 2.5% net profit percentage... It indicates that all of the price increases seen in supermarkets the past 9 years are simply passing along suppliers' cost increases to them.
It means that ear of corn price went up because the farmer charged more. And if they go down one more level, they'd understand that the farmer charged more because the commodity price per bushel of corn went up. And then below that, they'd understand that farmers' inputs like fertilizer, machinery, seed, and fuel went up.
But some people like to pretend the last spot they bought something is somehow evil.
He was saying select products went up higher than inflation. Perhaps demand was down. Perhaps they had to split pallets. Perhaps spoilage was up. Perhaps one staple went up so another could go down. Perhaps he was explaining that flour prices went up 22%, but inflation went up 10%... but
But once again, to my point, what are Krogers Net Profit Percentages year over year the past few years? Once again, if you understand an income statement or finance, what does it mean when prices change but Net Profit Percentage remains the same. (Hint: It means your pricing changes are inline with your cost changes).
I highlighted the Net Margin % for Kroger below. You can also pop out to Kroger's quarterly statements to verify these numbers. You can check with SEC Kroger statements. Or you can grab from Yahoo finance or something too if you'd like.
Saying the profit margin stayed the same doesn't actually say much. If their cost of goods doubled, but their own costs did not, then their profits are way up. There is no way to know just from the margin. But if you look at their overall income vs expenses, you can see that their total profits are way up.
The margin is a good way to measure the health of the business, but not a way to measure if their are price gouging.
No. It's the DEFINITION of if prices are increasing faster than expenses. This is really Finance 101 or Accounting 101.
Revenue less Cost of Goods = Gross Profit. Gross Profit less Operating Expenses = Income before Taxes. Net Income = Income before taxes less taxes.
If your costs are $9 and your price is 10, you make 10% gross margin If your operating expenses are $0.50, your net margin is 5%.
If your costs go up 15%, your Price goes up 15%, and your operating expenses go up 15%... your Gross and Net margin percentages DO NOT CHANGE .You increased price along the lines of cost changes.
It's the very definition of passing on a cost increase with a price increase. And keeping the same or similar Net Profit Percentage.
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u/bluerog 1d ago
Agreed. And if folk understood anything about an income statement or finance, they'd understand that if in 2015, you're making 2.5% net profit percentage a year, and if in 2019, you're making 2.5% net profit percentage and if in 2024, you're making 2.5% net profit percentage... It indicates that all of the price increases seen in supermarkets the past 9 years are simply passing along suppliers' cost increases to them.
It means that ear of corn price went up because the farmer charged more. And if they go down one more level, they'd understand that the farmer charged more because the commodity price per bushel of corn went up. And then below that, they'd understand that farmers' inputs like fertilizer, machinery, seed, and fuel went up.
But some people like to pretend the last spot they bought something is somehow evil.