CINCINNATI— As consumers continue to cut back on spending and eat more meals at home, Kroger Co. has responded by expanding its offering of private brand products. In the third quarter ended Nov. 5, the company’s own brands delivered identical sales growth that outpaced overall identical sales.
During a Dec. 1 conference call with analysts to discuss third-quarter financial performance, William McMullen, chief executive officer of Kroger, said third-quarter sales growth was led by Kroger and Private Selection brands.
“We continue to expand and diversify Our Brands portfolio at every price point,” Mr. McMullen said. “After launching Smart Way as our opening price point brand last quarter, we introduced several new Smart Way products this quarter and plan to roll out additional products next quarter.
“These products are meeting the needs of our customers on a budget, and we’ve already seen 2 million households to purchase Smart Way products.”
Net earnings attributable to Kroger in the third quarter were $398 million, equal to 55¢ per share on the common stock, down nearly 18% from $483 million, or 64¢ per share, in the prior-year period.
In the third quarter, Kroger recorded a loss on investments of $163 million, merger related costs of $15 million and legal settlement costs of $67 million. In the year-ago quarter, the company recorded a loss on investments of $73 million, company-sponsored pension plan settlement charges of $68 million, Home Chef contingent consideration costs of $7 million, transformation costs of $5 million and a positive adjustment for income tax audit examinations of $47 million.
Excluding items affecting comparability, Kroger’s net earnings on an adjusted basis were $643 million, up 9.2% from $589 million in the previous year’s third quarter.
Adjusted earnings per share were 88¢, an increase of nearly 13% from 78¢ in the third quarter of 2021.
“This growth was driven by top-line revenue and our disciplined approach to balancing investments with effective cost management,” Gary Millerchip, chief financial officer, said during the conference call.
Kroger’s third-quarter sales were $34.2 billion, up 7.2% from $31.9 billion the previous year. Identical sales excluding fuel increased 6.9% from the year-ago quarter.
In the quarter, Kroger saw customers looking for opportunities to save on food purchases for the entire family, Mr. McMullen said.
“Customers continue to engage with the Our Brands portfolio, which offers high-quality products at affordable prices,” he said. “Our Brands products are loved by every member of the family, including the pets. This quarter, we saw tremendous growth in our pet food brands as families continue to treat their dogs and cats.”
During the quarter, the company launched new Home Chef plant-based ready-to-cook meals.
“Home Chef continues to be an exceptional example of how Kroger's history of mergers help bring new and exciting capabilities to meet our customers' changing needs across the country,” Mr. McMullen said.Mr. Millerchip said the company expects full-year adjusted net earnings per diluted share of $4.05 to $4.15, representing growth of 10% to 13% from the previous year.