Kroger Posts Strong Q2 Earnings, Comps

For its second fiscal quarter, The Kroger Co. posted net earnings attributable to the company of $433 million, or 44 cents per diluted share, versus $347 million, or 35 cents per diluted share, in the year-ago period. Total sales gained 0.9% to $25.5 billion in the first quarter, or 5.7% excluding the effect of fuel operations, while identical supermarket sales grew, without fuel, by 5.3%.

Diluted earnings per share beat a Zacks Investment Research analyst estimate of 40 cents.

In a conference call, Michael Schlotman, Kroger CFO, noted all Kroger regions and supermarket departments reported positive idents excluding fuel during the quarter. As regards departments, natural foods continues to experience double-digit ident growth, while meat deli, and pharmacy departments also posted strong sales.

Rodney McMullen, Kroger chairman and CEO, said, “We are managing through a volatile operating environment, with fuel margins normalizing compared to last year’s record highs, inflation in some commodities and deflation in others. Our results show the power of our Customer 1st Strategy. Our associates are making a difference for our customers by providing excellent service and product quality and selection, and we continue to improve the shopping experience by bringing technology and digital capabilities to our business. Our integration with Vitacost.com is going very well. We are inviting customers in Cincinnati to try ClickList, our order online, pickup at the store solution we are learning from Harris Teeter. And more customers than ever before are engaging with our digital tools.”

Kroger operates 2,626 supermarkets and multi-department Fred Meyer stores in 34 states and the District of Columbia, as well as 780 convenience stores, 327 fine jewelry stores, 1,342 supermarket fuel centers and 37 food processing plants in the United States.