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    Kroger Posts Strong 3Q Results

    CINCINNATI - The Kroger Co. reported strong third-quarter numbers yesterday, signaling what some analysts say is a good sign for the nation's top-ranked grocery chain, following last year's contentious Southern California labor strike.

    CINCINNATI - The Kroger Co. reported strong third-quarter numbers yesterday, signaling what some analysts say is a good sign for the nation's top-ranked grocery chain, following last year's contentious Southern California labor strike.

    Kroger's net income of $142.7 million scored a 29 percent increase over the $110.2 million it earned a year ago when the strike was just getting under way. Sales rose 6 percent to $12.9 billion, from $12.1 billion a year ago, boosted by a 1.8 percent gain in identical-store sales (excluding fuel), which marksKroger's best showing in the key retail industry barometer in more than five years. Including fuel sold in its 520 supermarket fuel stations and nearly 800 convenience stores, same-store sales comparisons gained 3.2 percent.

    Net earnings totaled $142.7 million, or 19 cents per fully diluted share, compared to $110.2 million, or 15 cents per diluted share, for the third quarter of 2003. "We are very pleased with our sales performance in the third quarter," said David B. Dillon, Kroger chairman and c.e.o. "Kroger's identical food-store sales showed strong improvement over the second quarter. Our continued focus on fulfilling our customers' needs is an important part of our strategy to increase earnings through strong, sustainable identical food-store sales growth."

    The company said its Ralphs and Food 4 Less stores in Southern California accounted for 0.1 percent of the sales increase, and that it would continue boosting spending in the market to try to win back shoppers after a four-and-a-half-month strike and lockout there that ended early this year.

    "We see Southern California as a great market," Dillon told analysts during a conference call Tuesday. "Generally speaking, we are clearly seeing improvements made." Dillon declined to offer predictions about the pace of Kroger's business recovery in Southern California and also declined to answer analysts' questions about the savings Kroger is achieving as the result of labor agreements that resolved the strike and lockout.

    Kroger said it expects to spend up to $1.8 billion this year on capital investments, excluding acquisitions, which would be a decline of up to $300 million from the upper end of Kroger's original estimate for this year. Total debt at the end of the third quarter was $7.8 billion, down $607 million from a year ago.

    The retailer operates 2,531 supermarkets and multidepartment stores in 32 states under the names Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smiths, Frys, Frys Marketplace, Dillons, QFC, and City Market. Kroger also operates 792 convenience stores, 439 jewelry stores, 520 supermarket fuel centers, and 42 food processing plants.

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