Kroger Reports 50th Quarter of Sales Growth
The Kroger Co. enjoyed a boost in total sales of 4.7 percent in the first quarter of its 2016 fiscal year, and celebrated its 50th consecutive quarter of same-store sales growth.
Q1 overall sales were $34.6 billion, compared with $33.1 billion for the same period last year. Total sales, excluding fuel, increased 7.8 percent.
The Cincinnati-based grocery giant reported net earnings of $680 million, or 70 cents per diluted share, up from $619 million, or 62 cents a share, a year ago. Identical-supermarket sales growth, without fuel, grew 2.4 percent in Q1.
“We are very pleased with a solid quarter, during which we continued to strengthen our connection with customers and expand our ClickList offering to more customers in more markets,” Rodney McMullen, Kroger’s chairman and CEO, said at Thursday’s Q1 earnings call. “Fifty consecutive quarters of positive identical-supermarket sales growth is extraordinary. Our associates work tirelessly to produce these consistently remarkable results. We’ve been through all kinds of business cycles during the last 50 quarters, and we’ve demonstrated time and again that regardless of the environment, you can count on Kroger to continue executing our strategy, investing in growth and creating value for our customers and shareholders.”
Omnichannel Advancements
In additional to continued investment in people, with more than 12,000 new associates joining the fold after a company-wide store hiring event in May, Kroger continues to expand its digital presence, “marching steadily toward a time when we can provide our customers with anything, anytime, anywhere,” McMullen said.
McMullen noted that Kroger’s ClickList and ExpressLane offerings are now available in 25 markets, with more to come. “Our merger with Harris Teeter gave us a base of learnings that allowed us to quickly ramp up the development of ClickList,” he said. “Customers have downloaded nearly 3 billion digital coupons and offers from our mobile app and website. And we continue to experiment with Vitacost.com’s ship-to-home technology and platform.”
He added that Kroger’s Technology business unit was just named one of the Top 100 places to work by Computerworld magazine.
Fiscal Guidance
Total operating expenses – excluding fuel and Roundy’s – decreased four basis points as a percent of sales, compared with the prior year.
FIFO operating margin on a rolling four quarters basis – excluding fuel, Roundy’s, the 2015 and 2014 contributtions to the UFCW Consolidated Pension Plan, and the 2014 contributions to The Kroger Co. Foundation – increased five basis point from the prior year.
Kroger's strong EBITDA performance resulted in a return on invested capital, excluding Roundy’s, for Q1 of 14.08 percent, compared with 14.03 percent a year ago.
The company confirmed its net earnings guidance range of $2.19 to $2.28 per diluted share for 2016. Kroger also confirmed its identical-supermarket sales growth guidance, excluding fuel, of approximately 2.5 percent to 3.5 percent for 2016. Capital investments, excluding mergers, acquisitions and purchases of leased facilities, are expected to be in the $4.1 billion-4.4 billion range for the year.
“Kroger’s core business is solid,” McMullen asserted. “We are providing exceptional customer service and the highest-quality, freshest products. Customers are giving us higher marks for better product selection and store layout, as well as friendlier service. We remain focused on customer loyalty that grows tonnage and both our top and bottom lines, which creates value for shareholders.
“Where we are right now, it looks like we will be at the low end to midpoint of our 2016 net earnings-per-diluted-share range,” he continued. “Where we end up in the full range will be driven primarily by fuel margins.”
Kroger employs 431,000 associates at 2,778 retail food stores under a variety of local banner names in 35 states and the District of Columbia.