Last updated on June 21st, 2016 at 09:02 am
For the first quarter of fiscal 2016, The Kroger Co.’s identical (ID) supermarket sales growth, without fuel, of 2.4 percent. That marks Kroger’s 50th consecutive quarter of positive identical supermarket sales growth, excluding fuel.
Kroger also reported reported net earnings of $680 million, or $0.70 per diluted share vs. $619 million, or $0.62 per diluted share, in the prior-year quarter.
Among other highlights of the quarter, the Cincinnati-based grocer exceeded its goal to slightly expand FIFO operating margin, without fuel and Roundy’s, on a rolling four quarters basis, and the chain now is offering ClickList and ExpressLane online ordering services in 25 markets.
Chairman and CEO Rodney McMullen said, “We are very pleased with a solid quarter during which we continued to strengthen our connection with customers and expand our ClickList offering to more customers in more markets. Fifty consecutive quarters of positive identical supermarket sales growth, excluding fuel, is extraordinary. Our associates work tirelessly to produce these consistently remarkable results. We’ve been through all kinds of business cycles during the last 50 quarters, and we’ve demonstrated time and again that regardless of the environment, you can count on Kroger to continue executing our strategy, investing in growth and creating value for our customers and shareholders.”
During the quarter, total sales increased 4.7 percent to $34.6 billion vs. $33.1 billion for the same period last year. Total sales, excluding fuel, increased 7.8 percent in the first quarter compared to the same period last year. Total sales, excluding fuel and Roundy’s, increased 3.5 percent in the first quarter compared to the same period last year.
FIFO gross margin was 23.0 percent of sales for the first quarter. Excluding fuel and Roundy’s, FIFO gross margin decreased 2 basis points from the same period last year.
Kroger said its long-term financial strategy is to use its financial flexibility to drive growth while also returning capital to shareholders. Maintaining its current investment grade debt rating allows the company to use its cash flow to take advantage of strategic and financially compelling opportunities, to continue its fill-in strategy, repurchase shares and fund the dividend, which is expected to increase over time.
Over the last year, Kroger has used free cash flow to repurchase $1.1 billion in common shares; pay $397 million in dividends; invest $3.6 billion in capital, and merge with Roundy’s Inc. for $866 million.
Kroger also confirmed its net earnings guidance range of $2.19 to $2.28 per diluted share for 2016. Based on current fuel margin trends, the company believes it will be at the low-end to mid-point of this range. Kroger expects fuel margins will be at or slightly below the five-year average.
It also confirmed its identical supermarket sales growth guidance, excluding fuel, of approximately 2.5 percent to 3.5 percent for 2016.
The company continues to expect capital investments excluding mergers, acquisitions and purchases of leased facilities, to be in the $4.1 to $4.4 billion range for the year.
Kroger operates 2,778 retail food stores under a variety of local banner names in 35 states and the District of Columbia. Kroger and its subsidiaries operate an expanding ClickList offering—a personalized, order online, pick up at the store service—in addition to 2,230 pharmacies, 785 convenience stores, 323 fine jewelry stores, 1,400 supermarket fuel centers and 38 food production plants in the United States.
In addition, Kroger supports more than 100 Feeding America food bank partners, breast cancer research and awareness, the military and their families, and more than 145,000 community organizations including schools. A leader in supplier diversity, Kroger is a proud member of the Billion Dollar Roundtable.
