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    Kroger Continues to Buck Trends with Q2 Performance

    Celebrates 47th consecutive quarter of comp sales gains

    By Jim Dudlicek, EnsembleIQ

    The Kroger Co. continues to deliver rock-solid performance topped by same-store sales growth for a staggering 47 consecutive quarters.

    “Our team of associates continues to drive our Customer 1st strategy by taking care of our customers in big and small ways,” Kroger Chairman and CEO Rodney McMullen said about the company’s second-quarter financials, announced today. “We continue to earn customer loyalty and gain market share.”

    Same-store sales were up 5.3 percent in Q2. Total sales, excluding fuel, increased 5.7 percent in Q2 over the same period last year. Including fuel, sales increased 0.9 percent to $25.5 billion, due to lower retail gasoline prices, compared to $25.3 billion a year ago.

    Q2 net earnings were $433 million, or 44 cents per diluted share, up from $347 million, or 35 cents, for the year-ago period.

    “We are pleased with our second quarter performance,” McMullen said. “Our core food business continued its strong performance and we benefitted from fuel margins that expanded throughout the quarter.”

    Outpacing the industry

    Kroger’s long-term financial strategy continues to be to use cash flow from operations to repurchase shares, fund its dividend, increase capital investments and maintain its current investment grade debt rating, while its strong financial position allowed the company to return more than $1 billion to shareholders through buybacks and dividends over the last four quarters. During the second quarter, Kroger repurchased 1.1 million common shares for a total investment of $43 million.

    “Its strong financial performance has just defied or bucked every trend in this business,” Meg Major, Progressive Grocer’s chief content editor, told National Public Radio’s Mark Garrison about Kroger on the Marketplace Morning Report's September 11 broadcast.

    Kroger’s stock is up 35 percent in the last year amid a lower broader market. The secret appears to be the Cincinnati-based grocery giant’s leveraging of shopper insights data, through its strategic alliance with Dunnhumby, to ensure its “Customer 1st” strategy continues to deliver on its promises.

    “We are investing to grow our business for the future while delivering on our promises today,” McMullen said. “For example, our stores are hiring to fill 20,000 new, permanent jobs and we are expanding our digital and ecommerce offerings. Our confidence in Kroger has never been stronger.”

    Kroger raised its same-store sales growth guidance, excluding fuel, to a range of 4 percent to 5 percent for fiscal 2015, up from 3.5 percent to 4.5 percent.

    By Jim Dudlicek, EnsembleIQ
    • About Jim Dudlicek As editor-in-chief of Progressive Grocer, Jim Dudlicek oversees daily operations of the magazine, spearheads its signature features, produces PG’s monthly Trend Alert newsletter on center store issues, moderates its regular webcast series, and writes and comments about a wide range of grocery issues. A food industry journalist since 2002, Jim came to PG in June 2010 after covering the dairy industry for 7½ years, during which time he served as chief editor of Dairy Field and Dairy Foods magazines. A graduate of Marquette University, Jim is fascinated by how truly progressive grocers inspire consumers to enjoy food, transforming the industry from mere merchants into educators that can take the most basic of all necessities and turn it into something profound and life-enhancing.

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