Kroger, the largest US supermarket chain, posted strong first quarter profits today (20 June), driven by increased sales and cost cuts.
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Total sales for the quarter increased by 8.2%, up to US$19.4bn for the quarter ended 20 May. Same-store-sales were up 7.2%, or 5.6% excluding fuel.
Net earnings totalled $306.4m, or 42 cents per diluted share, compared to $294,3m, or 40 cents per share, reported for the comparable period last year.
“Kroger associates continue to focus on delivering improved service, selection and value to our customers and this has translated into another quarter of impressive identical sales growth. Our associates’ commitment to our Customer First strategy enabled Kroger to pay – for the first time in 18 years – a quarterly cash dividend to shareholders,” said David B. Dillon, Kroger chairman and chief executive officer.
The company also said that operating, general and administrative costs as a percentage of sales declined 19 basis points during the quarter to 18.17%.
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By GlobalDataKroger invested $449.9m during the period, up from $400.6m a year ago. Kroger also repurchased 6.7m shares for a total investment of $133.5m.
Net debt also decreased by $829.3m from last year, to $6.6bn.
The company predicted that identical sales, excluding fuel, for the full year would increase by 4%, up from Kroger’s earlier guidance of 3.5%. However, the company’s EPS guidance did not account for the need to increase legal reserves, the company said, reiteraring its previous guidance of 6%-8%. If legal reserves were taken out of the equation, Kroger said that EPS would rise by 9-11%.
“Our results this quarter can be tied directly to the contributions of our 290,000 associates. We appreciate their hard work and thank them for making strides in several key areas, including continually improving our customers’ shopping experience,” Mr. Dillon said.
