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Consumer and Community Impacts of Hazard Pay Mandates But the increases are subsiding Moreover, quarterly data indicates that the sales and profit increases experienced in early 2020 were transitory and were settling back toward pre-COVID trends as 2020 drew to a close. This quarterly trend is evident in quarterly financial reports filed by California's two largest publicly traded companies in the grocery business: The Kroger Company (which includes Ralphs, Food for Less, and Fred Meyers, among others) and Albertsons (which includes Safeway, Albertsons, and Vons, among others). Figure 1 shows that the average profit margin for these two companies was 3.6 percent of sales in the Spring of 2020, declining to 1.9 percent by the fourth quarter of the years Monthly sales data contained in the 2020 Independent Grocer's Financial Survey showed a similar pattern, with year -over -year sales peaking at 68 percent in mid -March 2020, but then subsiding to 12 percent as of the first three weeks of June (the latest period covered by the survey) 6 Figure 1 Combined Net Profit Margins During 2020 Albertsons and The Kroger Companies 4.0% x 3.5% m w 3.0% `o m 2.5% C_ F2.0% N 1.5% O a 1.0% — v Z 0.5% 0.0% Spring 2020 Summer 2020 Fall 2020 While grocers continued to benefit from higher food and related sales during the second half of 2020, they also faced higher wholesale costs for food and housing supplies, as well as considerable new COVID-19 related expenses. These include expenses for paid leave and overtime needed to cover shifts of workers affected by COVID-19, both those that contracted the virus and (primarily) those that were exposed and needed to quarantine. Other COVID-19 costs include those for intense in-store cleaning, masks for employees, new plastic barriers at check-outs and service counters, and additional staffing and capital costs for scaling up of e-commerce, curbside and home delivery. 5 In their SEC 10-Q quarterly report for the four -month period ending in June 2020, Albertsons reported that consolidated 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 three-month period ending in mid -September, the company reported year -over -year sales growth of 11.2 percent and before -tax profits equal to 2.5 percent of sales. In their 10-Q report filed for the three-month period ending in early December, Albertsons showed year -over -year sales growth of 9.3 percent, and profits as a percent of sales of just 1.0 percent Data for the Kroger Company indicates that year -over -year sales growth subsided from 11.5 percent for the three- month period ending in May 2020 to 8.2 percent for the three-month period ending in August and further to 6.3 percent for the three-month period ending in November. Profits as a percent of sales fell from 3.8 percent to 3.5 percent, and further to 2.8 percent during the same three quarterly periods. (Source: EDGAR Company Filings, U.S. Securities and Exchange Commission. httus://www.sec. og_v/edgar/searched ar comianysearch.html. 6 Supra 3 7