Grocery chain Publix experienced subdued sales in its second fiscal quarter, as regulatory changes impacted drug prices and a challenging economic environment drove down demand.

The company’s sales for the three months ended June 27 rose 1 per cent to $15.7 billion, but comparable store sales slid 0.5 per cent.

Management noted that sales performance was weaker compared to the first quarter due to the impact of the Medicare maximum fair price (MFP) change, which reduced drug prices. They added that sales were also negatively affected by economic conditions that impacted consumer spending.   

Net earnings for the period rose 20.5 per cent to $1.7 billion, but mainly thanks to the impact of net unrealized gains on equity securities. Excluding this, profit was up 1.7 per cent to $1.1 billion.

For the first half, sales increased 1.5 per cent on a reported basis to $31.9 billion, but decreased 0.3 per cent on a comparable basis. Net earnings, excluding the impact of net unrealized gains on equity securities, dropped 8 per cent to $2.2 billion.

“I’m grateful for our associates’ commitment to our customers, our communities and each other, especially during this difficult economic time,” commented CEO Kevin Murphy.

Publix currently operates 1441 stores in Florida, Georgia, Alabama, Tennessee, South Carolina, North Carolina, Virginia and Kentucky. 

Last year, the chain posted a 5 per cent uplift in sales to $62.7 billion.