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Kroger’s 50-Plus Consecutive Quarters Of ID Sales Growth Ends

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Last updated on March 3rd, 2017 at 09:35 am

The Kroger Co.’s record 52 consecutive quarters of positive identical supermarket sales, excluding fuel, has ended as, on Thursday, the Cincinnati-based grocery chain reported that ID sales, without fuel, were down 0.7 percent in the fourth quarter of 2016, which ended Jan. 28. The company reported net earnings of $0.53 per diluted share for the quarter.

Fiscal 2016 net earnings were $2.05 per diluted share and ID sales growth, without fuel, was 1.0 percent. The company says its fiscal year net earnings per diluted share included charges related to the restructuring of certain multi-employer pension obligations to help stabilize associates’ future benefits. Excluding the effect of these charges, Kroger’s fiscal year adjusted net earnings per diluted share were $2.12.

“As we all know, some times are just more challenging than others and last year certainly didn’t end the way we expected at the start of the year…” Kroger Chairman and CEO Rodney McMullen said during the company’s earnings call Thursday.

“We’re obviously disappointed with our identical supermarket sales number in the fourth quarter and our performance on several other (key performance indicators)…” he added.

McMullen attributed some of the ID sales decline to the competitive marketplace, “value shoppers or shoppers on a budget.”

In a press release, McMullen said, “True to our history, we will continue making proactive investments in our Customer 1st Strategy to maintain our strong competitive position. We are lowering costs to invest those savings in our people, our business and technology. This approach will enable us to deliver on our long-term net earnings per diluted share growth rate target of 8-11 percent, plus an increasing dividend, as it has in the past.

“In 2016, Kroger grew market share, increased tonnage and hired more than 12,000 new store associates,” he added. “For 2017 and beyond, we will continue delivering for our customers while also setting the company up for our next phase of growth and customer-first innovation.”

Fourth quarter 2016 results

Net earnings for the fourth quarter totaled $506 million, or $0.53 per diluted share. Net earnings in the same period last year were $559 million, or $0.57 per diluted share.

Total sales increased 5.5 percent to $27.6 billion in the fourth quarter compared to $26.2 billion for the same period last year. Total sales, excluding fuel, increased 4.4 percent in the fourth quarter over the same period last year. Recent mergers with Roundy’s and ModernHEALTH contributed to this growth, says Kroger.

Fiscal 2016 results

Net earnings for 2016 totaled $1.98 billion, or $2.05 per diluted share. Excluding the restructuring of certain multi-employer pension obligations, adjusted net earnings totaled $2.05 billion, or $2.12 per diluted share. Net earnings in 2015 were $2.04 billion, or $2.06 per diluted share.

Total sales increased 5.0 percent to $115.3 billion in 2016 compared to $109.8 billion in 2015. Excluding fuel, total sales increased 6.7 percent in 2016 compared to 2015. The company’s mergers with Roundy’s and ModernHEALTH contributed to this growth, says Kroger.

2017 guidance

Kroger says it anticipates ID sales, excluding fuel, to range from flat to 1 percent growth for 2017.

The company expects net earnings to range from $2.21 to $2.25 per diluted share, including an estimated $.09 for the 53rd week.

Kroger expects the operating environment in the first half of 2017 to be similar to the second half of 2016. The company’s results in the second half of 2017 are expected to show improvement as the company cycles the previous year.

Capital investments, excluding mergers, acquisitions and purchases of leased facilities, are expected to be in the $3.2 to $3.5 billion range for 2017.

Additional details can be found here.

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