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    Strong Earnings Propel Kroger Through Q1

    Same-store sales up for 46th consecutive quarter

    The Kroger Co. reported net earnings of $619 million, or $1.25 per diluted share, and identical supermarket sales growth, without fuel, of 5.7 percent in the first quarter of its 2015 fiscal year. 

    Kroger continues to deliver strong sales and earnings results. We are pleased with our start for the year, with identical supermarket sales growth in every department and supermarket division," said Rodney McMullen, chairman and CEO of the nation’s largest traditional grocery retailer.

    Total sales increased 0.3 percent to $33.1 billion in Q1 compared to $33 billion for the same period last year. Total sales, excluding fuel, increased 6.4 percent in Q1 over a year ago.

    “We are managing through a volatile operating environment, with fuel margins normalizing compared to last year’s record highs, inflation in some commodities and deflation in others,” McMullen said. “Our results show the power of our Customer 1st Strategy. Our associates are making a difference for our customers by providing excellent service and product quality and selection, and we continue to improve the shopping experience by bringing technology and digital capabilities to our business. Our integration with Vitacost.com is going very well; we are inviting customers in Cincinnati to try ClickList, our order online, pickup at the store solution we are learning from Harris Teeter; and more customers than ever before are engaging with our digital tools.”

    Total operating expenses – excluding retail fuel operations and pension agreements – decreased 15 basis points as a percent of sales compared to the prior year.

    “Kroger has produced consistently remarkable results for so long that it might be easy for some to take a quarter like this for granted, so it is important to emphasize it is the efforts of our incredible team of associates, connecting with customers, that is driving our success,” McMullen said. “Time and again, we have shown that by taking care of our customers, Kroger is creating sustainable value for our shareholders.”

    Kroger confirmed its net earnings guidance range of $3.80 to $3.90 per diluted share for fiscal 2015. This range is within the company’s long-term net earnings per diluted share growth rate guidance of 8 to 11 percent, plus a growing dividend. Kroger raised its identical supermarket sales growth guidance, excluding fuel, to a range of 3.5 to 4.5 percent for fiscal 2015, up from 3 to 4 percent.

    The company continues to expect capital investments, excluding mergers, acquisitions and purchases of leased facilities, to be in the $3 billion to $3.3 billion range for the year.

    "[Kroger] is again benefitting from dynamics acting on the American consumer right now," said Ken Odeluga, a senior market analyst at City Index. "A lot of this is to do with extra leeway shoppers are afforded by multi-year lows in fuel prices, but is also from a properly rooted economic recovery. "It’s enabled US shoppers to engage in additional spending, some of it at KR, lifting same-store sales excluding gasoline for the 46th straight quarter, by 5.7% in Q1 2015."

    Cincinnati-based Kroger operates 2,626 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.  

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