Andrew Bary

Publix Super Markets is a grocer in the Berkshire Hathaway vein.

The company dominates the Florida market, has the supermarket industry's highest margins and the best balance sheet among its peers.

Founded in 1930 by George Jenkins, Publix is known for its customer service. Its success has driven out rivals from the big Florida market.

Unfortunately for investors, the company is owned by its employees as well as the founding Jenkins family. It's the largest employee-owned company in the country.

Publix's market value now is $62 billion, more than Kroger, the country's largest supermarket chain at $46 billion, and Target, which is valued at $53 billion.

The Publix stock price is set quarterly by the company and the most recent mark earlier this month was $19.20 a share, up 26% over the past year. During the past 25 years, the stock is up tenfold and many longtime employees are now millionaires. If holders want to sell stock, the company buys it back at the prevailing market price.

Publix earlier this week reported its fourth-quarter financial results. Sales last year were up 4.6% to $59.7 billion in 2024, and net income after taxes excluding changes in the value of the company's equity portfolio was down slightly to $4 billion in 2024 from $4.1 billion in 2023. High employee costs weighed on the results.

"Being employee-owned is a huge advantage for Publix," says David Livingston, a retailing consultant. "People would rather work for Publix. It gets better quality employees than Walmart. You can retire and have a nice nest egg in stock. The stores are clean and well kept. It's not the cheapest or the most expensive store." The company has a strong reputation among Floridians.

He says stock ownership and bonuses tied to store profitability are motivators for employees.

"If a fellow employee is goofing off or stealing, if you work for Kroger, you may not care. If you work for Publix, that guy is taking money out of your pocket."

The stock now is valued at nearly 16 times its 2024 earnings, a premium to Kroger which trades for about 14 times trailing earnings. The dividend yield is 2.2%.

The company's net margins were nearly 7% in 2024, against 2% for Kroger. Publix earned nearly $1 billion more than Kroger last year with less than half of Kroger's sales.

There were 247,000 shareholders in early February, nearly all of the company's employee base of 255,000. Workers get stock through retirement plans and can also buy it directly from the company after one year on the job.

Publix has a customer-friendly reputation and stock ownership could be a motivating factor for employees. Kids, for instance, can get free cookies in the stores.

The company has nearly 1,400 stores including 874 in Florida and it has steadily expanded into neighboring states with 217 stores in Georgia and 94 in Alabama. It opened about 40 new stores last year.

"Publix pretty much owns Florida and it is expanding north methodically, " Livingston says, noting that the balance sheet is a major asset. Publix does face competition from Walmart, Target and Costco, but little competition from grocers. Convenience is a major plus for Floridians.

There are other successful private or employee-owned grocers like Wegman's in the Northeast and Hy-Vee in the Midwest.

Publix has a balance sheet that Berkshire CEO Warren Buffett likely would admire.

There is no debt, nearly $3 billion in cash, lots of real estate (stores, distribution centers) and a portfolio of bonds and stocks. There were $11.6 billion of bonds and $3.5 billion of stocks at year-end with the equity portfolio up about 30% last year, topping the S&P 500.

CEOs have tended to be corporate lifers including the current leader, Kevin Murphy, who took the top job in 2024. Murphy, 54, began his career as a front-desk service clerk at a Publix store when he was in his teens and became a store manager at 24.

Company executives don't talk much to the media -- there was no immediate response from Publix for a Barron's request for comment. Barron's has written about Publix's success, including an article a year ago.

Publix's top brass are paid modestly by industry standards with Murphy earning $3.3 million last year, a fraction of the $15.7 million of compensation for the Kroger CEO, Rodney McMullen, who recently resigned from the job. That restraint is part of the corporate culture.

Founder George Jenkins built Publix based on some key values including "Treat customers like royalty." That has paid off royally as it deepens its hold on Florida while expanding up the Eastern Seaboard.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 07, 2025 00:30 ET (05:30 GMT)

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