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CINCINNATI - Kroger's fiscal 2006 is shaping up to be a banner year. The chain here said yesterday its third quarter sales increased 4.8 percent to $14.7 billion, contributing to a 15.8 percent year-to-date revenue gain and same-store sales gains of 5 percent with fuel and 5.3 percent without.
Third-quarter earnings for the nation's top ranked supermarket chain reached $214.7 million, or 30 cents per share, up from $185 million, or 25 cents per share a year ago. The performance bested analysts' expectations of 28 cents per share. Kroger shares climbed $1.16 to $23.49 by the close of trading yesterday.
"Our associates continue to put customers first, as Kroger's third quarter performance indicates," said David B. Dillon, Kroger chairman and c.e.o. "These results once again demonstrate Kroger's ability to consistently deliver strong, sustainable growth over time."
Kroger's earnings for the first three quarters of the year were $730 million, or $1.01 per share, up 8 percent from last year.
Kroger attributed year-to-date gains largely to price cuts aimed at competing with Wal-Mart and traditional supermarket competitors. The chain also said it was offered more seasonal and general merchandise in larger Fred Meyer stores to attract Wal-Mart's base of supercenter shoppers.
"Kroger's performance shows consistent improvement as our associates execute our business strategy. This allows us to be competitive in every aspect of our business and generate value for shareholders," Dillon said. "Our associates continue to place a priority on serving customers. These results clearly show what we can achieve by focusing on improving the service, product selection, quality and pricing we offer customers throughout the year."
Kroger's stock price has climbed 27 percent so far this fiscal year. Based on its year-to-date financial performance and sustained sales momentum leading into the holiday season, the retailer said it anticipates same store sales growth will exceed 5 percent for the fourth quarter, excluding fuel. Kroger also raised its guidance for earnings per share growth in fiscal 2006 to 8 to 10 percent from 6 to 8 percent. Based on current results, the company said it is targeting the high end of this range.
At the end of the third quarter, Kroger operated (either directly or through its subsidiaries) 2,473 supermarkets and multi-department stores in 31 states under two dozen local banners including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's, Dillons, QFC and City Market. Kroger also operates (either directly or through subsidiaries, franchise agreements, or operating agreements) 774 convenience stores, 418 fine jewelry stores, 619 supermarket fuel centers, and 42 food processing plants.