Retail Profits Soared to All-Time High In 2021 As Consumers Struggled to Make Ends Meet

By Nathalie Voit

A new report from Accountable.US showed the ten largest U.S. retailers generated billions in increased profit last year while passing on price hikes to consumers.

Companies from Amazon to Target to CVS Health capitalized on soaring inflation rates to overcharge Americans in 2021. The consumer watchdog group said that rather than keeping costs stable for everyday working families, top-name retailers used inflation as an excuse to generate billions of dollars in excess profit.

America’s largest retailers saw their profits soar by $24.6 billion to $99 billion last year.

According to a news release published by the Commerce Department on March 30, corporate pre-tax profits in 2020 surged 25% to around $2.8 trillion. That’s the largest annual increase since 1976, the Federal Reserve Bank of St. Louis said.

The double-digit growth in corporate profits far outpaced the 7% increase in consumer prices during the same time. This lends credence to the idea that even if companies were raising prices to compensate for inflation, the price spikes were far more than enough to cover their own rising costs.

Not only did corporate profits reach historic highs, but annual net profit margins for companies in the S&P 500 index surpassed 12% in 2021, according to FactSet data. In contrast, there were only three years since 1999 when profit margins for companies in the index posted double-digit gains: 2006, 2018, and 2019. Even then, margins in those years did not exceed 10.75%.

Despite reporting record profits, top executives continue to warn about the impact of inflation during earnings calls. In the fourth quarter of 2021, 356 S&P 500 companies cited “inflation” during conference calls. This was the highest number in over ten years, FactSet said.

“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 said in a statement to CBS MoneyWatch.

Legislators agree.

“Corporate greed is motivating large companies to use the pandemic and supply-chain issues as an excuse to raise prices simply because they can,” House Energy and Commerce Committee Chairman Rep. Frank Pallone (D-NJ) said during a February inflation hearing.

“This isn’t about inflation,” Sen. Elizabeth Warren (D-MA) told PBS News on April 12. “This is about price gouging.”

Click here to access the full report.