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Kroger continued its industry-leading streak of impressive same-store sales growth for 45 consecutive quarters, as evidenced by its most recent fourth quarter and full year fiscal results ended Jan. 31, 2015. Cranking out an impressive 5.2 percent comparative sales increase, excluding fuel, the fruits of its acquisition of Harris Teeter that closed last January further buoyed Kroger's fiscal year performance.
During Q4, the Cincinnati-based retailer posted total sales of $25.2 billion, an increase of 8.5 percent from the year-ago period (14.2 percent excluding fuel), alongside a 6 percent same-store sales gain, minus fuel.
Describing 2014 as "an outstanding year by all measures," Kroger Chairman and CEO Rodney McMullen said the company "captured more share of the massive food market [and] delivered on our commitments and invested to grow our business. While improved fuel margins contributed to our results in the second half of the year, our core operating performance without fuel shows that our associates are improving our relationship with customers in ways that grow loyalty and generate strong shareholder returns," noted McMullen.
Kroger's Q4 net earnings tallied $518 million, or $1.04 per diluted share, while total fiscal year sales climbed to $108.5 billion, good for a healthy 10.3 percent increase over the prior year, and a 13 percent increase excluding fuel. Further, the company posted $1.7 billion in 2014 net earnings, or $3.44 per diluted share. Adjusted net earnings for fiscal 2014 totaled $1.77 billion, or $3.52 per diluted share.
Driven by its robust financial position, Kroger returned more than $1.6 billion to shareholders through share buybacks and dividends in 2014. The company also hired an additional 25,000 associates throughout the year - including 6,000 veterans - 90 percent of which are located in the company's supermarket divisions.
Looking toward its 2015 performance, Kroger anticipates identical sales growth, excluding fuel, of 3-4 percent, and full-year net earnings of $3.80 to $3.90 per diluted share.
The company's performance also elevated its stock price by 5 percent during mid-day trading.
According to Ken Odeluga, senior market analyst for London-based City Index, future trends in the market may prevent Kroger from delivering the staggering numbers that it did in Q4.
"With the shares having gained more than 64% over the last 12 months, and a 52% rise in 2013, the bar is getting higher for continued strong sentiment," Odeluga said. "The point is, a number of forces are coalescing that are expected to press on Kroger's 'batting' average, over the next few quarters, largely from fuel-related to headwinds."
Noting that the retailer stated in its latest earnings that its "metrics would probably moderate in forthcoming quarters" due to unusual margin strength from retail fuel prices, Odeluga added that Kroger is likely "mindful of the impact lower crude oil prices and consequently cheaper wholesale fuel will have on customer perception."
"I think essentially, Kroger is saying it will soon need to reduce prices to closer to the average forecourt rate for its biggest rivals," he said.
Kroger operates 2,625 supermarkets and multi-department stores in 34 states and the District of Columbia under two dozen local banner names including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's.