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The Kroger Co. enjoyed its 38th consecutive quarter of same-store sales growth in the first quarter of fiscal 2013, with other economic indicators similarly in positive territory for the grocery giant.
Kroger's Q1 net earnings were 92 cents per diluted share and identical supermarket sales growth, without fuel, was 3.3 percent. The Cincinnati-based grocery giant also expanded FIFO operating margin on a rolling four-quarter basis and increased its return on invested capital.
"Kroger achieved strong sales and record earnings per share for the quarter, and our customers’ positive view of us continues to improve,” said David B. Dillon, Kroger’s chairman and CEO. “This is because of our continued focus on the Customer 1st strategy. Our first quarter results give us the confidence to raise our guidance for the year.”
Total sales increased 3.4 percent to $30 billion in Q1 compared with $29.1 billion for the same period last year. Total sales, excluding fuel, increased 3.8 percent over the same period last year. Net earnings for the first quarter totaled $481 million, or 92 cents per diluted share. Net earnings for the first quarter last year were $439 million, or 78 cents per diluted share.
FIFO gross margin was 20.65 percent of sales for the first quarter. Excluding retail fuel operations, FIFO gross margin decreased 15 basis points from the same period last year. The company recorded a $17 million LIFO charge during the quarter compared to a $46 million LIFO charge in the same quarter last year. Operating, general and administrative costs plus rent and depreciation, excluding retail fuel operations, declined 21 basis points as a percent of sales compared to the prior year.
Q1 FIFO operating profit, excluding fuel, increased approximately $47 million over the prior year. Excluding fuel and the extra week in fiscal 2012, on a rolling four quarter basis, the company’s FIFO operating margin increased 11 basis points.
Kroger has returned more than $1.3 billion to shareholders through share buybacks and dividends over the last four quarters. During the first quarter, Kroger repurchased 4.5 million common shares for a total investment of $146 million.
Capital investment totaled $646 million for the first quarter, compared to $557 million for the same period last year.
Return on invested capital on a rolling four quarter 52-week basis was 13.5 percent compared to 13.4 percent during the same period last year.
Based on Q1 results, the company increased its net earnings guidance to a range of $2.73 to $2.80 per diluted share for fiscal 2013. The original guidance was $2.71 to $2.79 per diluted share. The company’s long-term growth rate guidance is 8 – 11 percent, plus a growing dividend.
Kroger continues to expect identical supermarket sales growth, excluding fuel, of approximately 2.5 percent to 3.5 percent for FY 2013.
“The Kroger team’s relentless focus on delivering on our Customer 1st strategy, quarter after quarter, continues to set us apart,” Dillon said. “We will continue to build on this strong momentum to drive growth and greater shareholder value.”
Kroger operates 2,419 supermarkets and multi-department stores in 31 states under two dozen local banner names including Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry's, King Soopers, QFC, Ralphs and Smith's.