Last updated on September 12th, 2014 at 10:27 am
The Kroger Co. on Thursday reported net earnings of $347 million, or $0.70 per diluted share, and identical supermarket sales growth, without fuel, of 4.8 percent in the second quarter of fiscal year 2014. Net earnings in the same period last year were $317 million, or $0.60 per diluted share. It marks the Cincinnati-based grocer’s 43rd consecutive quarter of positive identical supermarket sales growth.
“We are winning with customers because we offer a full range of advantages, including a great overall shopping experience, excellent customer service, a complete assortment of both national and corporate brand products, and everyday low prices and promotional offerings,” said Kroger CEO Rodney McMullen. “As we improve our connection with customers, we are also executing our growth plan and delivering on our key performance indicators—all of which is fueling strong financial results for shareholders.”
This is the second consecutive quarter that includes Harris Teeter in Kroger’s statement of operations. Year-over-year percentage comparisons are affected as a result.
Total sales increased 11.6 percent to $25.3 billion in the second quarter compared to $22.7 billion for the same period last year. Total sales, excluding fuel, increased 12.4 percent in the second quarter over the same period last year.
Kroger raised its identical supermarket sales growth guidance, excluding fuel, to 3.5 percent to 4.25 percent for fiscal 2014. The previous guidance was 3.0 percent to 4.0 percent.
“We are accelerating core business growth and investing to create unique competitive positioning for today and the future,” McMullen said. “Based on our strong quarter results, we raised our net earnings per diluted share and identical supermarket sales growth guidance for the year. We are well on our way to achieving a 13 to 15 percent net-earnings-per-diluted-share growth rate, including net accretion to earnings from the Harris Teeter merger, plus the dividend for fiscal 2014.”
Kelly Tackett, U.S. research director at Planet Retail, added, “While many of its competitors cut back full-year guidance on the back of poor Q1 results, Kroger actually raised its outlook for the year. To say that we expect more of the same from the leading U.S. grocer in Q2 doesn’t in itself seem newsworthy, but given the headwinds facing all grocery retailers, a 43rd consecutive gain in comparable store sales is in fact quite remarkable.
“We are particularly encouraged by signs that this traditionally slow and methodical mover has adopted a more proactive and agile approach. With competitive pressures assailing the traditional grocery channel from all sides, Kroger’s recent acquisitions are positioning it well not only to protect its market share but also to expand it in some areas.
“Planet Retail has long viewed the Harris Teeter acquisition as a smart strategic move toward Kroger’s goal of being a truly national grocery chain. In the near term, though, the ramped-up presence in the Southeast also provides a route to steal further market share from Walmart.
“Additionally, the Vitacost deal shores up Kroger’s healthy-living play and its nascent e-commerce capabilities, both of which should help insulate it from Amazon’s incursions into the grocery space.”
