US supermarket group Kroger today (24 June) revealed that sales in its first quarter rose 11.5%, climbing to US$23.1bn.
Excluding fuel, same-store sales were up 5.8% during the three months to 24 May.
Net earnings rose to $386m, or $0.58 per share, up from $336.6m, or $0.47 per share, for the comparable period of last year.
The company said that its low-price policy meant that it is fearing well in the economic downturn in the US.
“Kroger continues to help customers stretch their budgets in a number of ways, including lower prices and our expanded generic drug and gas discount programmes,” David Dillon, Kroger chairman and chief executive officer, said.
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By GlobalDataHowever, the company did see gross margins decline by five basis points, excluding fuel and expenses related to labour unrest in the first quarter of last year.
Improvement in shrink expense helped fund continued investment in pricing, Kroger said.
Excluding fuel and the costs of the labour dispute, Kroger’s operating margin expanded by two basis points.
During the first quarter, Kroger invested in 17 new, expanded or relocated stores and 36 remodels at a cost of $636.7m.
Kroger said that it is on-track to open, expand or relocate 70 to 80 stores and complete between 175 and 200 store remodels during its fiscal 2008 year.
Looking to the full year, Kroger raised its identical sales and earnings guidance, predicting sales growth of 4-5.5% excluding fuel. Previous guidance was 3-5%.
The company also increased its EPS targets from the $1.83-$1.90 previously predicted to $1.85-$1.90 for fiscal 2008.
“The underlying strength of Kroger’s long-term business model is illustrated by our solid first quarter results and updated guidance. We continue to balance investments in our customers’ overall shopping experience with current economic conditions, including inflationary costs,” said Dillon.
