> Cal-Maine’s gross profit jumped 10-fold from one 26-week period in 2021 to the same period in 2022, according to the company’s most recent quarterly financial statement. For the 26-week fiscal period ending in November 2021, gross profits were $50.4 million. In 2022 for the same period, gross profits were $535.3 million.
The net shows an increase as well, but not totally out of line with the increase in sales and costs, even when we look back several years.
Feb 2022: Y/Y net profit margin is +119.63%
May 2022: Y/Y net profit margin is +1633.06%
Aug 2022: Y/Y net profit margin is +442.88%
Nov 2022: Y/Y net profit margin is +7890.32%
The claimed amounts are gross profits - which do not account for majority of a company's overhead expenses, such as personnel, insurance, compliance, etc... ie. the things that increased in cost the most during covid.
Net Profit would be far more interesting, but even there we would expect an increase if prices were raised due to costs. It just won't be as sensational as the number currently being tossed around.
Not to mention we're comparing data to 2021, which had most things shut down. A better comparison would be to compare to 2019...
That is what makes it gouging. The profit margin was greatly increased through potential collusion and/or unfair pricing for what they correctly perceive as an inelastic good.
https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foo...
> For the 26-week fiscal period ending in November 2021, gross profits were $50.4 million. In 2022 for the same period, gross profits were $535.3 million.
They had a near zero profit margin for 2021. And based on their record of profit margins, it seems like their business has been volatile since 2015 or so.
I am not an expert on the egg business or food in general, but there is no reason that a 10x increase in profit has to mean malfeasance.
Volatile businesses can have large swings in profit margin, otherwise no one would want to do them.
But that is beside the point that there is no set nominal “appropriate” profit margin for a given business.
That does not mean that businesses with high profit margins are not colluding, or corrupt, or acting in ways that should be illegal.
But it also means you cannot simply conclude from a few quarters of higher profit margins that a business is behaving unethically.
Watch the movie The Informant. It's a true story and we only know it happened because one guy was trying not to go to jail. What's happening now is nothing new.
Why would eggs be any different? It's not like they pop out of the chicken and land on your plate - there's a ton that goes into getting them into the store just so you can buy them.
Assuming egg production didn't experience significant cost increases seems precarious without evidence.
It's in the food industry - which suffered some of the most draconian restrictions on personnel and safety measures available at the time. For all we know, half of that cost increase could have gone to just sheets of plastic to hang all over the place and single-use disposable masks, gloves, boot coverings, hair nets and more that all had to be changed several times per day.
It's not Price Gouging simply because we don't like it folks...
> Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands
No, not at all. It simply indicates the more expensive brands had enormous margins before covid and were able to keep pricing more stable against rising costs.
Your cheap brands had nowhere to go, except raise prices when costs increase. This is so obvious and basic, it's weird it needs to be said.
Additionally, government policies don't happen in a vacuum folks. Policies made it difficult to produce and manufacture, and shocker - prices went way up. This is not rocket science...