In the third quarter, Kroger emphasized how it is executing against its strategic restructuring plan, and advanced its identical store sales, but narrowly missed a Wall Street earnings estimate.
Kroger reported that its company net earnings were $263 million, or 32 cents per diluted share, versus $317 million, or 39 cents per diluted share, in the year-prior quarter.
Adjusted net earnings were $381 million, or 47 cents per diluted share, versus $394 million, or 48 cents per diluted share, in the period a year earlier. Adjusted diluted earnings per share missed a MarketBeat-published analyst consensus estimate by a penny.
Identical store sales gained 2.5% in the quarter year over year. Total sales were $28 billion compared with $27.8 billion in the year-previous period. Operating profit was $254 million versus $647 million in the quarter the year before.
As a result of a portfolio review, Kroger decided to divest its interest in Lucky’s Market and recognized a non-cash impairment charge of $238 million in the third quarter, and the portion of this charge attributable to Kroger is $131 million.
Rodney McMullen, Kroger chairman and CEO, said, “Kroger’s customer obsession and focus on operational excellence continued to generate positive results in the third quarter. Identical sales were the strongest since we started Restock Kroger and gross margin rate, excluding fuel and pharmacy, improved slightly in the quarter. At the same time, we continued to reduce costs as a percentage of sales. We are using the power of Kroger’s stable and growing supermarket business to create meaningful incremental operating profit through the alternative profit stream businesses, which adds up to a business built for long-term growth that generates consistently attractive total shareholder returns. Kroger continues to generate strong and durable free cash flow as reflected by the fact that the company has reduced debt by $1.5 billion over the prior four quarters and continues to increase its dividend to create shareholder value. Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders, both today and in the future.”