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Kroger Reports 2Q Results

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Last updated on September 16th, 2016 at 02:56 pm

The Kroger Co. has reported net earnings of $383 million, or $0.40 per diluted share, and identical supermarket sales growth, without fuel, of 1.7 percent in the second quarter of 2016 ended Aug. 13.

Net earnings in the same period last year were $433 million, or $0.44 per diluted share. The company’s net earnings per diluted share for this year included charges related to the restructuring of certain multi-employer pension obligations to help stabilize associates’ future benefits. These obligations are now part of the plan the company manages. Excluding the effect of these charges, Kroger’s adjusted net earnings were $454 million, or $0.47 per diluted share.

Total sales increased 4.0 percent to $26.6 billion in the second quarter compared to $25.5 billion for the same period last year. Total sales, excluding fuel, increased 7.3 percent in the second quarter compared to the same period last year. Total sales, excluding fuel and Roundy’s, increased 2.9 percent in the second quarter compared to the same period last year.

“I’m very proud of our associates for their determined focus on always making a difference for our customers,” said Chairman and CEO Rodney McMullen. “Their execution of our Customer 1st Strategy in a deflationary environment helped deliver growth in identical store sales, units and market share. We are focused on long-term performance over a three- to five-year horizon. We have the right strategy, the right people and the financial flexibility to execute our strategy, which allows us to continue investing in our associates and our business and growing market share. By staying on our strategy, we create long-term value for our shareholders.”

Fiscal 2016 guidance

As a result of continued deflation, Kroger says it has lowered its net earnings guidance range to $2.03-$2.13 per diluted share for 2016. Kroger’s adjusted net earnings guidance range per diluted share for 2016 is $2.10-$2.20, which excludes the $0.07 charge from the company’s commitment to restructure certain multi-employer pension obligations. The previous guidance range was $2.19-$2.28, which did not anticipate the $0.07 charge from the company’s commitment to restructure the pension obligations.

For identical supermarket sales growth, excluding fuel, the company expects the remainder of 2016 to be in the 0.5 percent-1.5 percent range, which is 1.4 percent to 1.8 percent for the full year.

The company lowered expected capital investments—excluding mergers, acquisitions and purchases of leased facilities—to $3.6-$3.9 billion for the year. The previous expectation was $4.1-$4.4 billion.

Over the long term, the company expects to achieve its net earnings per diluted share growth rate guidance of 8-11 percent, plus a growing dividend.

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