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Kroger’s 3Q Net Earnings Down Vs. A Year Ago

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Last updated on June 14th, 2024 at 09:20 am

The Kroger Co. today reported net earnings of $391 million, or $0.41 per diluted share, and identical supermarket sales growth, without fuel, of 0.1 percent in the third quarter of 2016, which ended Nov. 5. Net earnings in the same period last year were $428 million, or $0.43 per diluted share.

“I am proud of our associates for continuing to connect with our customers in a difficult operating environment. Deflation persisted as we expected during the quarter. We are firmly focused on our long-term strategy of improving our connection with customers and associates, and continue working on process changes to lower costs. We don’t change our strategy based on quarterly swings in results. We remain committed to delivering on our long-term earnings per share growth rate guidance.”

Total sales increased 5.9 percent to $26.6 billion in the third quarter compared to $25.1 billion for the same period last year. Total sales, excluding fuel, increased 7.1 percent in the third quarter compared to the same period last year. Total supermarket sales, excluding fuel and Roundy’s, increased 1.6 percent in the third quarter compared to the same period last year.

Kroger narrowed its net earnings guidance range to $2.03 to $2.08 per diluted share for 2016. The previous guidance range was $2.03 to $2.13. Kroger’s adjusted net earnings guidance range per diluted share for 2016 is $2.10 to $2.15, which excludes the $0.07 charge from the company’s commitment to restructure certain multi-employer pension obligations in the second quarter. The previous adjusted guidance range was $2.10 to $2.20.

For the fourth quarter of 2016, Kroger expects slightly positive identical supermarket sales growth, excluding fuel.

The company’s expected capital investments—excluding mergers, acquisitions and purchases of leased facilities—is $3.6 to $3.9 billion for the year.

The Cincinnati-based company says it is completing its business plan process for 2017 and will provide specific 2017 guidance in March. Kroger anticipates both positive identical supermarket sales and net earnings per diluted share growth, excluding the 53rd week. Net earnings growth will likely be below the low end of the company’s 8-11 percent net earnings per diluted share long-term growth rate guidance.

Kroger expects the operating environment in the first half of 2017 to be similar to today. The second half of 2017 should show improvement as the company cycles the current environment.

Over the long term, Kroger says it is committed to achieving a net earnings per diluted share growth rate of 8-11 percent, plus a growing dividend.

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