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CINCINNATI - Leading supermarket chain Kroger Co. on Tuesday reported higher quarterly earnings although holiday sales were soft, and said 2003 earnings would be a few cents lower than analysts' average estimate.
Kroger reported net income rose to $381.0 million, or 50 cents per share, for the fiscal fourth quarter ended Feb. 1, from $368.5 million, or 45 cents per share, a year earlier.
One-time items included pretax expenses of $7.6 million associated with systems conversions and other merger-related items, and pretax income of $15.2 million related to excess energy contracts in California.
"Sales during the holiday season were soft amid consumer concerns about the weak economy, high unemployment and uncertainty over a possible war. Competition remains intense and consolidation is continuing at a rapid pace," said chairman and CEO Joseph Pichler.
Total sales for the fourth quarter increased 2.8 percent to $12.5 billion, and total food-store sales rose 2.4 percent. Sales at food stores open at least a year declined 1.0 percent including fuel and declined 1.8 percent excluding fuel.
Kroger said its sales at food stores open at least a year, including fuel, through the first five weeks of fiscal 2003 are tracking higher than in the fourth quarter of 2002. The company said it has benefited from weather and the continued implementation of its strategic plan.
Kroger has been implementing a strategy of lower prices to compete with discount giant Wal-Mart Stores Inc., which has been rapidly expanding its food business.
The company said it estimates net earnings will be $1.63 per share in fiscal 2003.
Assuming that inflation is flat in 2003 and that the economic and competitive environment do not change, Kroger said it expects sales at food stores open at least a year, including fuel, to increase in 2003.