CVS, Kroger and more accused of profiteering from inflation

Photo credit Getty Images | Stephen Chernin/Stringer

With some Democrat lawmakers in Washington raising the alarm that big corporations are using nationwide inflation as an excuse to price-gouge their loyal customers, one new economic study appears to support that theory.

A study released Friday by corporate watchdog Accountable.US analyzed financial statements of the 10 retailers in America over the last two years – retailers including Amazon, CVS, Kroger, Lowe’s and Target – and found that their profits increased collectively by $24.6 million, totaling $99 billion.

2021 was already the most profitable year in over seven decades – since 1950 – with pre-tax profits leaping 25% over the previous year.

“When corporate profits are at their highest levels in nearly 50 years and companies are showering their shareholders with billions in new benefits over the last year, it raises serious questions whether industries like retail have had to hike prices on families to such excessive degrees,” Accountable.US President Kyle Herrig wrote in a statement.

Inflation does have some very real causes that hearken back to basic supply/demand economic tenets. A supply chain hiccup caused by COVID-induced labor shortages has created a backlog of shipped goods to be pushed out, thereby creating more demand than there is supply of certain everyday products.

This phenomenon naturally leads to a rise in prices, but the question on everyone’s minds is how much is too much?

“As our customers advocate for value, we're continuously working with our suppliers to keep costs as low as possible for our customers,” Home Depot said in a statement to CBS Marketwatch. “Our growth has been based on overwhelming demand in home improvement.”

But prices climbed faster in the last 12 months than they had in 40 years.

“This isn't about inflation,” Sen. Elizabeth Warren told MSNBC regarding the price hikes and the resulting sticker shock some Americans are feeling as they purchase their weekly groceries. “This is about price gouging.”

“We have seen unconscionable price hikes in everyday consumer goods,” agreed Rep. Jan Schakowsky of Illinois during a February congressional hearing. “Instead of giving Americans a break from skyrocketing prpices, companies are pocketing this extra cash.”

The report from Accountable.US seems to support the notion that corporations are raising their prices above and beyond the necessary amount to cover inflation costs and pocketing the excess to the tune of massive profits.

Some examples cited in the study: “New pricing strategies” at Lowe’s led to $8.4 billion in profit in just its most recent financial quarter. “Aggressive” price increases referenced by the CEO of TJX – parent company of stores like Home Goods, Marshalls and TJ Maxx – created a $3.3 billion profit margin in 2021.

And Target’s CEO celebrated a “year of record growth” after raking in $6.9 billion in profits last year.

With profits predicted to grow again in 2022 anywhere between 6% and 8%, according to the National Retail Federation, Herrig said it’s past time that the consumer gets some relief.

“It's time corporations finally help shoulder the burden average Americans have taken on throughout the health crisis,” Herrig said. “Corporations can start by stabilizing prices for consumers instead of pursuing even higher profits — on top of finally paying their fair share in taxes.”

Featured Image Photo Credit: Getty Images | Stephen Chernin/Stringer