That adage is more useful when looking at individual
companies, or maybe new businesses.
For long established, highly regulated operations, I would expect consistent profit margin figures across pretty much all companies in the business to represent a pretty accurate view of the situation, and to show if they are earning extra profit due to COVID.
I have never heard of a business that reaches $x of profit and then switches to pricing everything so that they get $0 of profit.
And why would I be concerned with gross margin? If insurance companies were profiting more than normal from COVID, then it would show up in the profit margin figure.
Thanks for bringing up that point -- and sorry to hear that! Profit margin has been pretty good (~40% margin), after all expenses have been said and done
Someone is playing fast and loose with the word "profit".
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...
Generally, a low profit margin amongst the entire industry indicates that business operations are going about as efficiently as possible given current technology and knowledge.
Grocery stores have long had ~2% or even less profit margins. The people working at Costco, Walmart, Kroger, Albertsons, Target, Aldi, Lidl, Tesco, Amazon, etc. are pretty good at what they do, and those managers are not known for getting lavish pay. After all, how could they, since their competition would steal their customers in their extremely price sensitive business.
i dont think that s fair. in an efficient market, profit margins are slim for the benefit of the consumer, which means businesses are not super profitable and need to invest continuously.
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