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Kroger Delivers 48th Consecutive Quarter Of Positive ID Store Sales

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The Kroger Co. today reported net earnings of $428 million, or $0.43 per diluted share, and identical supermarket sales growth, without fuel, of 5.4 percent for the third quarter of fiscal 2015. That marks the company’s 48th consecutive quarter of positive ID stores sales growth.

Net earnings in the same period last year were $362 million, or $0.36 per diluted share, including the benefit of certain tax items. Excluding this, Kroger’s adjusted net earnings were $345 million, or $0.35 per diluted share, for the third quarter of fiscal 2014.

“Our associates delivered another quarter of excellent identical supermarket sales and earnings results that provide great momentum as we head into the holiday season,” said Rodney McMullen, chairman and CEO. “Kroger’s consistent results demonstrate once again that our relentless focus on customers is the key to sustainable shareholder returns. We continue to implement our growth plan and expect to exceed our long-term net earnings per diluted share growth rate for fiscal 2015.”

As a result of lower retail fuel prices, total sales increased 0.4 percent to $25.1 billion in the third quarter compared to $25.0 billion for the same period last year. Total sales, excluding fuel, increased 5.5 percent in the third quarter vs. the same period last year.

Kroger recorded a $9 million LIFO charge during the third quarter compared to an $85 million LIFO charge in the same quarter last year.

FIFO gross margin was 22.4 percent of sales for the third quarter. Excluding retail fuel operations, FIFO gross margin decreased 4 basis points from the same period last year.

Total operating expense—excluding retail fuel operations, a $25 million contribution to The Kroger Co. Foundation in the third quarter of 2014 and an $80 million contribution to the UFCW Consolidated Pension Plan in the third quarter of 2015—decreased 23 basis points as a percent of sales compared to the prior year.

Return on invested capital (ROIC) on a rolling four quarters basis was 14.16 percent. The prior year third quarter calculation does not include a full year of Harris Teeter assets and results, so the company did not present a comparative number. Kroger continues to expect fiscal 2015 ROIC to increase from the fiscal 2014 result.

Kroger returned more than $1.1 billion to shareholders through share buybacks and dividends over the last four quarters. During the third quarter, Kroger repurchased 853,000 common shares for a total investment of $31 million.

Capital investments, excluding mergers, acquisitions and purchases of leased facilities, totaled $832 million for the third quarter vs. $681 million for the same period last year.

Kroger raised its net earnings per diluted share guidance to a range of $2.02 to $2.04 for fiscal 2015. The previous guidance was $1.92 to $1.98 per diluted share. This range exceeds the company’s long-term net earnings per diluted share growth rate guidance of 8 percent to 11 percent, plus a growing dividend.

For the fourth quarter of fiscal 2015, Kroger expects identical supermarket sales growth, excluding fuel, of 4.0 percent to 4.5 percent. This implies an annual growth rate of approximately 5.0 percent to 5.25 percent for fiscal 2015.

About the author

Terrie

An 11-year employee of The Shelby Report who writes for and about food. In previous lives, she worked at a police department in Texas and an amusement park in Arkansas. She also was a newspaper publisher for more than a decade. Not sure which of those qualified her for this job.

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