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Consumer and Community Impacts of Hazard Pay Mandates <br />But the increases are subsiding <br />Moreover, quarterly data indicates that the sales and profit increases experienced in early 2020 <br />were transitory and were settling back toward pre-COVID trends as 2020 drew to a close. This <br />quarterly trend is evident in quarterly financial reports filed by California's two largest publicly <br />traded companies in the grocery business: The Kroger Company (which includes Ralphs, Food for <br />Less, and Fred Meyers, among others) and Albertsons (which includes Safeway, Albertsons, and <br />Vons, among others). Figure 1 shows that the average profit margin for these two companies was <br />3.6 percent of sales in the Spring of 2020, declining to 1.9 percent by the fourth quarter of the year.5 <br />Monthly sales data contained in the 2020 Independent Grocer's Financial Survey showed a similar <br />pattern, with year -over -year sales peaking at 68 percent in mid-March 2020, but then subsiding to <br />12 percent as of the first three weeks of June (the latest period covered by the survey).6 <br />Figure 1 <br />Combined Net Profit Margins During 2020 <br />Albertsons and The Kroger Companies <br />4.0% <br />,3.5% <br />M <br />v 3.0% <br />0 <br />m 2.5% <br />c <br />x02.0% <br />M <br />1.5% <br />0 <br />0-1.0% <br />v <br />Z 0.5% <br />0.0% <br />Spring 2020 Summer 2020 Fall 2020 <br />While grocers continued to benefit from higher food and related sales during the second half of <br />2020, they also faced higher wholesale costs for food and housing supplies, as well as considerable <br />new COVID-19 related expenses. These include expenses for paid leave and overtime needed to <br />cover shifts of workers affected by COVID-19, both those that contracted the virus and (primarily) <br />those that were exposed and needed to quarantine. Other COVID-19 costs include those for intense <br />in-store cleaning, masks for employees, new plastic barriers at check-outs and service counters, and <br />additional staffing and capital costs for scaling up of e-commerce, curbside and home delivery. <br />5 In their SEC 10-Q quarterly report for the four-month period ending in June 2020, Albertsons reported that consolidated <br />sales were up 21.4 percent from the same period of 2019 and before -tax profits were 3.5 percent of total sales. In the <br />three-month period ending in mid-September, the company reported year -over -year sales growth of 11.2 percent and <br />before -tax profits equal to 2.5 percent of sales. In their 10-Q report filed for the three-month period ending in early <br />December, Albertsons showed year -over -year sales growth of 9.3 percent, and profits as a percent of sales of just 1.0 <br />percent. Data for the Kroger Company indicates that year -over -year sales growth subsided from 11.5 percent for the three- <br />month period ending in May 2020 to 8.2 percent for the three-month period ending in August, and further to 6.3 percent <br />for the three-month period ending in November. Profits as a percent of sales fell from 3.8 percent to 3.5 percent, and <br />further to 2.8 percent during the same three quarterly periods. (Source: EDGAR Company Filings, U.S. Securities and <br />Exchange Commission. hnps://www.sec.gov/edgar/searchedgar/` companysearch.html. <br />6 Supra 3 <br />