US grocery retailer Kroger has reported lower second-quarter net earnings, hit by the early redemption of debt and the continuing after-effects of the labour dispute in Southern California.

The company reported net earnings of US$142.4m, or 19 cents per share, for the second quarter to 14 August, compared to $190.4m, or 25 cents per share, in the year-ago period.

Total sales for the second quarter of 2004 increased 5.1% to $13.0bn. Identical food-store sales, including fuel, increased 2.1% and, excluding fuel, increased 0.6%. Excluding the Ralphs and Food 4 Less stores affected by the 141-day labour dispute that ended in February, identical food-store sales, including fuel, increased 2.8% and, excluding fuel, increased 1.1%.

David Dillon, Kroger's chairman and chief executive officer, said that, based on year-to-date performance, it will be "challenging" to achieve the company's previously announced identical food-store sales target of 1.3% for the full fiscal year, excluding fuel and stores affected by labour disputes.

Regarding the post-strike environment in Southern California, Dillon said, "The marketplace remains very competitive. Ralphs is focused on improving identical food-store sales to pre-strike levels. Based on current conditions in the market, we believe our efforts to return sales and earnings to pre-strike levels will continue for the foreseeable future. Ralphs is executing the plan to rebuild our business."