US retailer Kroger today (16 June) upped its full-year profit and sales target after a first quarter in which its CEO said the company was “connecting” with consumers.
For the quarter to 21 May, Kroger posted a 15.7% rise in net profit to US$432.3m. The retailer’s operating profit was up 12.2% at US$811m.
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The company’s sales including fuel rose 11% to US$27.5bn. When fuel was excluded, sales climbed 4.8%. Kroger said its identical supermarket sales, excluding fuel, were up 4.6%.
“Our Customer 1st strategy is clearly connecting with customers,” said chairman and CEO David Dillon. “We have shown that our focus on people, products, prices and the shopping experience is meaningful to customers through both good and challenging times. As a result, we achieved strong performance across the company.”
Kroger’s FIFO gross margin was 21.42% of sales for the first quarter of fiscal 2011. Excluding retail fuel operations, the retailer’s FIFO gross margin decreased by four basis points from the same period last year. Supermarket selling gross margin fell by seven basis points without fuel compared to last year’s first quarter.
The retailer recorded a US$46m LIFO charge during the quarter compared to US$15.4m last year. Kroger also increased its estimated LIFO charge for the year to US$150m from the original forecast of US$50-75m.
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By GlobalDataFor the full financial year, Kroger has forecast a 3.5-4.5% increase in identical supermarket sales, excluding fuel. Its previous estimate was for sales on that basis to rise by 3-4%.
Kroger is also targeting full-year earnings per share of US$1.85-1.95 per diluted share, up from its previous forecast of US$1.80-1.92. It said the new forecast was due to the “strength” of its first-quarter results and the estimated higher LIFO charge.
“Our guidance for the year reflects the balance we strive to achieve across our business – including strong identical sales growth and outstanding cost control, as well as increased earnings and earnings per share,” Dillon said. “Our Customer 1st strategy will drive increased sales, cash flow and earnings growth well into the future.”
