Kroger reports Q1 sales, earnings move higher
June 21, 2005
by FoodBusinessNews.net Staff
CINCINNATI — The Kroger Co. today reported net earnings of $294.3 million, or 40c per fully diluted share, for the first quarter ended May 21, 2005. Net earnings in the year-ago period were $262.8 million, or 35c per fully diluted share.
Total sales for the first quarter of fiscal 2005 increased 6.2% to $17.9 billion. Identical supermarket sales increased 3.8% with fuel and 2.4% without fuel.
"We're targeting the areas of our business that our customers have told us are most important to them," said David B. Dillon, Kroger chairman and chief executive officer. "Whether it's speeding up the checkout process, making sure our stores have the right products in stock, or rewarding our best customers with special savings, we're committed to making sure that every decision we make positively influences the way our customers feel about Kroger."
Mr. Dillon said Kroger's emphasis on placing the "customer first" generated increased customer traffic and higher average transaction size in identical supermarkets during the first quarter. Kroger's identical supermarket sales, excluding fuel and strike-affected stores, have shown sequential improvement for eight of the past nine quarters, he said.
Mr. Dillon noted Kroger continues to rebuild its business in southern California. Identical supermarket sales without fuel at both Ralphs and Food 4 Less were positive in the first quarter and, on a combined basis, increased 1.3% over the prior-year period.
Earnings before interest, taxes, depreciation and amortization at Ralphs and Food 4 Less were in line with Kroger's expectations.
"We're pleased with our progress in southern California, particularly in light of the significant challenges we have faced," he said "Our Ralphs and Food 4 Less associates are embracing the plan and are delivering against our strategy. We're seeing solid improvement."
On the strength of its first-quarter financial performance, Kroger today raised its earnings estimate for fiscal 2005. Kroger said it now expects earnings for the full year to exceed $1.24 per fully diluted share, an increase of 3c from guidance provided in March.
Kroger expects its 2005 earnings per share growth to be fueled by continued progress in southern California, improved results from the balance of the company, lower interest expense and fewer shares outstanding as a result of stock buybacks.