Kroger Heralds Dozen Years of Growth

In the wake of its merger announcement with Roundy’s, The Kroger Co. is celebrating its 48th consecutive quarter of identical supermarket sales growth, success that bodes well for the future of its new Midwestern partner.

Same-store sales, excluding fuel, rose 5.4 percent in the third quarter of Cincinnati-based Kroger’s 2015 fiscal year. Net earnings were $428 million, or 43 cents per diluted share, compared to $362 million, or 36 cents a share, in the year-ago period.

“Our associates delivered another quarter of excellent identical supermarket sales and earnings results that provide great momentum as we head into the holiday season,” said Rodney McMullen, Kroger chairman and CEO. “Kroger’s consistent results demonstrate once again that our relentless focus on customers is the key to sustainable shareholder returns. We continue to implement our growth plan and expect to exceed our long-term net earnings per diluted share growth rate for fiscal 2015.”

Total sales increased 0.4 percent to $25.1 billion in Q3 (a result of lower retail fuel prices, the company says), compared to $25 billion for the same period last year. Total sales, excluding fuel, increased 5.5 percent over the year-ago period. 

“All geographies and supermarket departments had positive identical supermarket sales, excluding fuel, during the quarter, with our deli and produce departments leading the way,” said Mike Schlotman, EVP and CFO. “We continue to see outstanding, double-digit identical sales growth in our Natural Foods department.”

Kroger Brand Performance 

Kroger’s Corporate Brands performance during Q3 was strong, Schlotman reported, representing nearly 28 percent of total units sold, and about 26 percent of sales dollars, excluding fuel and pharmacy.

“Simple Truth continues to grow at an astonishing rate, setting a record high for total sales in the third quarter, while continuing to establish all-time weekly sales records throughout the quarter,” he said. “Our newest brand, HemisFares, has been embraced by foodie customers. So much so that we are currently having difficulty keeping HemisFares Sicilian Gelato in stock. We are working with our Sicilian supplier to expand capacity, while maintaining the best-in-the-world quality of the product.”

Sustainability Efforts

McMullen lauded Kroger’s strides in sustainability, including waste reduction. “There is an important global dialogue taking place that underscores the positive role businesses play in sustainability. Kroger’s team has been making progress to integrate sustainable practices into our everyday business operations,” he said.

Of particular note, McMullen pointed out:

• In five years, the number of stores recycling food waste has increased 73 percent, from 290 to more than 1,075 this year.
• 30 of Kroger’s 37 manufacturing plants are sending zero waste to landfills – an increase of nine facilities since 2013.

“Taken together, Kroger is sending 69 percent less waste to landfills than we used to, and we will continue working toward zero waste,” McMullen said. “We look forward to sharing our new five-year sustainability goals – with an eye toward pushing for faster and more accelerated progress – in the near future.”

Kroger operates 2,620 supermarkets and multi-department stores in 34 states and the District of Columbia under two dozen local banner names including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's.