The chief of US supermarket group Kroger has said he expects to see a “pick up” in third- and fourth-quarter sales after yesterday (15 September) reporting a drop in half-year turnover.
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David Dillon, Kroger’s chairman and CEO, told analysts that its strongest departments were meats, deli, bakery, grocery and nutrition, although he said general merchandise continued to be “a little soft”.
“On the whole, we feel like we’re growing share pretty broad-based. And actually, it’s pretty broad-based across the divisions too. In the second quarter, we did have two divisions that had negative ID sales – those divisions were less than 1% negative – while two that were flat and the rest that were positive, so that’s pretty widespread,” Dillon said.
Kroger yesterday posted an increase in net earnings to US$689.5m for the first two quarters of 2009 compared to $662.5m in the comparable period of 2008.
Sales, however, dropped to $40.5bn from $41.2m in the prior year. Nevertheless, for the same period, identical supermarket sales, excluding fuel, increased 2.9%.
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By GlobalData“The consumers in the US are obviously going through a lot of trauma and so we’re seeing a change in the customer behaviour in our store a little bit,” Dillon told analysts. “For instance, the end of the month selling is noticeably at lower levels than it used to be, so it’s more impacted. We saw that through this last quarter and we actually saw earlier signs of it before, but I think it’s even more clear now.”
He added: “But people are spending money when they need to, that is meals for the day or for the week. But because they’re coming back a little more often and because they’ve consolidated purchases with us, we’re seeing a higher unit purchase per household over the course of a month, so I think that’s good news for us.”
Asked whether the company is seeing its private-label sales slow, Dillon said that for three quarters in a row the group had experienced 35% growth in grocery for corporate brands.
“Fourth quarter, first quarter and second quarter were all 35%. Now the growth in the fourth and first quarter was roughly a 300 basis point increase and in this quarter was roughly a 200 basis point increase. And so the rate of growth is different but we’re still running 300 basis points which is strong. We see this as a continuing trend, we do not see it subsiding, we’re very happy with that.”
