Kroger riding out economic storm with respectable third-quarter results
CINCINNATI People still need to eat and take their medicines.
Amid a dismal economic climate, The Kroger Co. today reported relatively healthy sales for the third quarter ended Nov. 8. Sales for the period were up 9.0 percent over the same period last year, with same-store supermarket sales rising 5.6 percent without the addition of fuel-center sales. When fuel sales are factored in, Kroger’s same-store results rose 7.8 percent.
Third-quarter net earnings were down slightly from year-ago levels, to $237.7 million, thanks in part to an after-tax charge of $15.9 million stemming from Kroger’s $25 million insurance deductible for disruption and damage caused by Hurricane Ike. Excluding the charge, third-quarter net earnings were $253.6 million, or 39 cents per diluted share, vs. $253.8 million or 37 cents per diluted share last year.
“Kroger’s sales continue to be strong in this tough economy,” said David Dillon, chairman and chief executive officer of the 125-year-old company. Acknowledging the financial pressure customers are feeling, Dillon asserted that the company’s “focus on low prices, quality products and providing a convenient, one-stop solution for their daily needs is resonating with our customers.
“Our company’s financial strength has been a competitive advantage for several years, and is even more so in the current environment,” he added. That solid balance sheet “gives us the flexibility to continue investments in our successful ‘Customer 1st’ strategy and store base that will create value…while delivering near-term financial results.”
Kroger now operates 2,477 supermarkets and food/drug combo stores in 31 states under two dozen local banners including Kroger, Ralphs, Fred Meyer, Food 4 Less, Fry's, King Soopers, Smith's, Dillons, QFC and City Market. The food and pharmacy giant plans to open, expand or relocate approximately 60 stores and complete between 165 and 180 store remodels during fiscal 2008, according to company reports.