Kroger, the largest supermarket chain in the US, yesterday (12 September) posted profits that were up 6% from the same period of last year, bolstered by an increase in overall grocery sales as consumers eat-out less because of higher fuel prices.

Profits for the quarter reached US$209m, up from $196.5m. Revenues rose 9% to total $15.14bn, up from $13.87bn a year ago.

Kroger said that efforts to build customer loyalty, price discounts and cost-cutting have helped increase profits.
“We are realising the benefits of our strategy, which includes listening to our customers and associates. We are investing our resources in what they tell us is most important, an approach that builds loyalty to Kroger,” said David B. Dillon, Kroger chairman and chief executive officer. “Internal measurements show customers are responding to the investments we have made in service, product selection and pricing. This focus by our associates on the business strategy enables us to achieve our financial objectives.”

Speaking at a conference call yesterday, Dillon said that increased consumer concern over increasing fuel prices, pushing spending down, was actually beneficial to the supermarket’s results. “Fuel costs are higher and people are feeling the pinch,” he suggested. “A family can be fed more economically at the supermarket,” he observed.
Same-store excluding fuel were up 6.2% for the quarter. Including fuel, same-store sales grew 8.2%. The company launched a loyalty card that rewarded customers with reduced fuel prices.

Kroger said cost-cutting measures, such as the use of energy-efficient lighting and the management of transportation to reduce petrol usage, had paid off.

Despite the positive results, Kroger shares tumbled yesterday to close at $22.75 from an open of $23.85, as FY guidance failed to meet Wall Street expectations.