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Safeway Inc (NYSE:SWY)
Gross Profit
$9,603 Mil (TTM As of Sep. 2014)

Safeway Inc's gross profit for the three months ended in Sep. 2014 was $2,175 Mil. Safeway Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $9,603 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Safeway Inc's gross profit for the three months ended in Sep. 2014 was $2,175 Mil. Safeway Inc's revenue for the three months ended in Sep. 2014 was $8,308 Mil. Therefore, Safeway Inc's Gross Margin for the quarter that ended in Sep. 2014 was 26.18%.

Safeway Inc had a gross margin of 26.18% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Safeway Inc was 31.57%. The lowest was 26.23%. And the median was 29.26%.

Warning Sign:

Safeway Inc gross margin has been in long term decline. The average rate of decline per year is -2%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Safeway Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=36139.1 - 26645.1
=9,494

Safeway Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=8307.9 - 6133.3
=2,175

Safeway Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 3128.3 (Dec. 2013 ) + 2160.2 (Mar. 2014 ) + 2139.5 (Jun. 2014 ) + 2174.6 (Sep. 2014 ) = $9,603 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Safeway Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,175 / 8307.9
=26.18 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Safeway Inc had a gross margin of 26.18% for the quarter that ended in Sep. 2014 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Safeway Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 10,59511,11311,58112,15312,51511,69411,60811,7949,4629,494

Safeway Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 2,2922,2312,6732,1662,1462,0953,1282,1602,1402,175
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