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The Kroger Co. posted a mixed bag of results for its fiscal 2010 first quarter, including an impressive 8.7 percent sales gain of $24.8 billion vs. $22.8 billion for the same period last year, alongside a less-than-stellar 14 percent decline in quarterly profits.
Excluding fuel sales, total sales for the nation’s top-ranked supermarket chain increased 3.1 percent in the first quarter ended May 22 from the year-ago period, while same-store sales without fuel during the first quarter increased 2.4 percent compared with the same period last year.
“I am pleased with the strong positive identical-sales growth we achieved in the first quarter while striking a better balance on margin investments,” said David B. Dillon, chairman and CEO of the Cincinnati-based grocery chain. “Our ‘Customer 1st’ strategy continues to deliver results through improvements in all four key areas we target: our people, our products, the overall shopping experience in our stores, and prices. As a result, the total number of families we serve continues to grow and our most loyal customers are buying more with us.”
Despite a boost in sales, Kroger’s first-quarter operating profits dropped to $722.5 million, or nearly 3 percent of total sales, from $843.9 million, or 3.7 percent of total sales, vs. a year ago. Meanwhile, net earnings for the first quarter totaled $373.7 million, or 58 cents per diluted share, compared with $435.1 million, or 66 cents per diluted share, posted during the same year-ago fiscal period.
“Throughout the difficult operating environment, the Kroger team has stayed squarely focused on delivering on our Customer 1st strategy,” said Dillon, who noted potential ongoing momentum for continued market share growth as a result of investments in its store base and concurrent cost-saving projects. “We are generating free cash flow that strengthens our financial position and rewards shareholders through dividends and share repurchases.”
Looking ahead, Kroger estimates net earnings for the balance of the fiscal year to range from $1.60 to $1.80 per diluted share, alongside expectations of a 2 percent to 3 percent same-store sales projection, sans fuel, for the year.
The Kroger Co. operates 2,470 supermarkets and multi-department stores in 31 states under two dozen local banner names, as well as 779 convenience stores, 375 fine jewelry stores, 909 fuel centers and 40 food-processing plants in the United States.