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Operational cost controls, continued emphasis on customer service, and a laser focus on delivering value for shoppers helped The Kroger Co. post a 13 percent gain in first-quarter profits to $435.1 million, or 66 cents per share, vs. $386 million, or 58 cents, last year. Sales during the fiscal measuring period ended May 23, 2009, were $22.8 billion, down slightly from $23.1 billion last year, due to the drop in gas prices, while the Cincinnati-based chain’s same-store sales rose 3.1 percent, excluding fuel.
During the quarter, the average retail price for a gallon of gas sold at Kroger’s fuel outlets was 41 percent lower than it was in the first quarter last year. Excluding fuel sales, total sales increased 4 percent over the prior year.
“By paying close attention to the changing needs of today’s shoppers, Kroger continues to refine what it offers customers through lower prices, friendly service and innovative stores that are appealing and convenient,” said David B. Dillon, Kroger’s chairman and CEO. “As a result of this approach, we continue to generate solid, consistent results for shareholders.”
Citing the strength of “our Customer 1st strategy and the flexibility of our business model [which enables] us to continue to deliver value for both customers and shareholders in a difficult environment,” Dillon said the Cincinnati-based chain remains committed to “investing in Kroger’s long-term growth as we work to emerge in an even stronger position as the economy recovers.”
Other Kroger’ Q1 highlights include:
--Capital investment, excluding acquisitions, totaled $653.5 million for the first quarter vs. $636.7 million for the same period last year. No acquisitions investments were made in the first quarter of this year, compared with the $79.5 million spent during the same period last year.
--The company’s total $7.4 billion debt decreased $243 million from a year ago, while on a rolling four-quarter basis, net total debt to EBITDA ratio was 1.78 vs. 1.95 during the same period last year.
--Kroger repurchased 950,000 shares of stock at an average price of $20.83 per share, for a total investment of $19.8 million. At the end of the quarter, $476 million remained under the $1 billion stock repurchase program announced in January 2008.
--Kroger confirmed its expectations for full-year same-store sales growth of 3 percent to 4 percent without fuel for fiscal 2009, which reflects the company’s outlook for product cost inflation of 1 percent to 2 percent, alongside its full-year 2009 earnings outlook of $2 to $2.05 per diluted share.
Kroger operates 2,475 supermarkets and multi-department stores in 31 states, under two dozen local banners including Ralphs, Fred Meyer, Food 4 Less, Fry’s, King Soopers, Smith’s, Dillons, QFC and City Market.