US: Own-label sales help drive Kroger profits
US retail giant Kroger today (10 March) booked an 8% rise in fourth-quarter profits and said its own-label products had offered "real value" to consumers.
The company posted net earnings of US$349.2m for the three months to 31 January, up from $322.9m a year earlier.
Kroger's quarterly consolidated sales inched up from $17.2bn to $17.3bn but the retailer's identical supermarket sales rose 3.8%, excluding fuel. Earnings per diluted share were up from $0.48 to $0.53.
Chairman and CEO David Dillon said Kroger's private-label ranges had meant the company could provide value to US shoppers.
"Kroger offered real value to customers when they needed it most through lower prices, led by our high-quality Kroger brands," Dillon said.
Kroger said around 27% of its revenues during the fourth quarter came from its namesake brands. "Growth was exceptionally strong for the Value and Private Selection tiers. Kroger banner brands experienced their strongest year-over-year growth during the quarter," the company said.
Nevertheless, margins dipped during the quarter with Kroger admitting that gross margin declined by eight basis pints, excluding fuel. Supermarket selling gross margin was down 36 basis points.
Looking at Kroger's fiscal 2008 year as a whole, net earnings rose from $1.18bn a year earlier to $1.25bn, although the retailer said profits were dampened by costs related to Hurricane Ike. Earnings per diluted share reached $1.90, up from $1.69 a year earlier.
Consolidated sales rose 8.2% to $76bn. Identical supermarket sales were up 5%, excluding fuel.
However, Kroger has forecast that identical sales growth will slow in the next year. The retailer has predicted a 3-4% rise in annual identical supermarket sales, excluding fuel, during the next fiscal year.
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