Kroger expanding e-commerce efforts

by Monica Watrous
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Kroger's Cincinnati division began inviting local customers to order on-line and pick up at the store.

CINCINNATI — The Kroger Co. seeks to fuel continued growth by expanding its use of digital technology. Less than a year after acquiring Vitacost.com, Inc., an on-line retailer of natural and organic products, the Cincinnati-based supermarket chain is leveraging the company’s e-commerce expertise to test and launch new platforms. In the Denver market, Kroger has introduced a new web site with its King Soopers division. Customers in the Denver area may shop for 36,000 natural and organic products on KingSoopers.com/LiveNaturally. The products offered on the web site are free from 101 artificial additives and preservatives, according to the company.

“The web site, which utilizes Vitacost technology platform and fulfillment network, creates an endless aisle experience with ship-to-home service for thousands of additional health foods, vitamins, minerals, and supplements that are available in our Denver area stores today,” said Mike Ellis, president and chief operating officer of Kroger, during a June 18 earnings call with financial analysts. “We are excited to see the results of this new pilot program.”

Kroger said it will test the concept in the Denver market before expanding to other markets.

Mike Ellis, president and chief operating officer of Kroger.

“Also this month, our Cincinnati division began inviting local customers to try our order on-line, pick up at the store solution we are learning from Harris Teeter, which we have been beta testing for a few months, and is now available in two of our Cincinnati area stores to all customers,” Mr. Ellis said.

Other efforts include the development of a mobile app and digital coupons.

“More than 2 billion digital coupons have been downloaded from our digital properties since we began offering digital coupons in 2009,” Mr. Ellis said. “It took four years to reach our first billion, and only 15 months to reach our second billion, and the third billion will take even less time.”

For the first quarter, net earnings attributable to Kroger rose to $619 million, equal to $1.27 per share on the common stock, up from $501 million, or 99c per share, in the prior-year period.

Sales totaled $33,051 million, up 0.3% from $32,961 million in the comparable quarter. Excluding fuel, sales increased 6.4% over the year-ago quarter. Identical supermarket sales, without fuel, increased 5.7%, marking the retailer’s 46th consecutive quarter of positive identical supermarket sales growth.

Operating profit advanced to $1,102 million, which compared with $930 million.

For the fiscal year, Kroger confirmed its net earnings guidance range of $3.80 to $3.90 per diluted share and has raised its identical supermarket sales growth guidance, excluding fuel, to a range of 3.5% to 4.5%, up from a previous range of 3% to 4%.
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