Kroger Q1 Sales Up 5.8%

The Kroger Co. reported total sales, including fuel, increased 5.8 percent to $29.1 billion in the first quarter of fiscal 2012, compared with $27.5 billion for the same period last year.

In the first quarter, which ended May 19, total sales excluding fuel increased 4.3 percent over the same period last year. Q1 identical supermarket sales without fuel increased 4.2 percent in the versus the year-ago period, marking 34 consecutive quarters of same-store sales growth.

“Kroger’s solid first-quarter performance demonstrates that our Customer 1st strategy continues to resonate with customers,” said David B. Dillon, Kroger’s chairman and CEO. “Our core business is growing, and we are rewarding shareholders through earnings growth, increasing dividends over time and share buybacks.”

Net earnings for the first quarter totaled $439.4 million, or 78 cents per diluted share, versus $432.3 million, or 70 cents per diluted share a year ago. Kroger board members have authorized a new $1 billion share repurchase program that replaces the prior authorization, which was exhausted on June 12.

Capital investment, excluding acquisitions and purchases of leased facilities, totaled $539.1 million for the first quarter, compared with $573.1 million for the same period last year. Net total debt was $7.8 billion, an increase of $662.1 million from a year ago. The increase is primarily the result of the issuance of debt to fund the UFCW pension plan consolidation.

Based on strong Q1 results, the company increased its earnings per share guidance to $2.33 to $2.40 per diluted share for fiscal 2012. The original guidance was $2.28 to $2.38 per diluted share.

Kroger continues to expect identical supermarket sales growth, excluding fuel, of 3 to 3.5 percent. In accordance with original guidance, this includes the expected negative effect on sales from prescription drugs coming off patent.

“We were very pleased with the results of the first quarter,” Dillon said. “Through our focus on the customer, we will continue to stand out among food retailers, and drive loyalty, cash flow and earnings growth in 2012 and beyond.”

Cincinnati-based Kroger operates 2,425 supermarkets and multidepartment stores in 31 states under two dozen local banner names including Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry’s, King Soopers, QFC, Ralphs and Smith’s.


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