Kroger Updates Q3 Sales Trends, Reaffirms Strong Guidance

Kroger on Wednesday confirmed its earnings guidance for the year and said its same store sales are trending higher -- despite that U.S. consumers are spooked by the economy and are cutting back on spending.

Kroger said its identical store supermarket sales growth was running above 5 percent, not including fuel sales, for the current quarter, while sales in the second four weeks of the quarter that began Aug. 17 were stronger than in the first four weeks, a period that included stores that were temporarily closed as a result of Hurricane Ike.

The nation's largest traditional supermarket operator revealed the good news prior to its investors' conference that was held in its Cincinnati home base.

"Kroger continues to see solid identical sales growth through the first eight weeks of the third quarter because of the commitment of associates in all aspects of our business to our customer-driven strategy," said David B. Dillon, Kroger chairman and c.e.o. "In this uncertain economy, we are delivering value to shoppers on any budget through our Customer 1st approach."

The company's financial strategy "provides us with sufficient liquidity to finance our short-term borrowing needs through our $2.5 billion five-year credit facility that matures in November 2011," Dillon continued, noting that on peak borrowing days, the chain expects more than $1.2 billion of the facility to remain available. Kroger also maintains uncommitted money market lines totaling $75 million, he added.

Based on its year-to-date results and outlook for the remainder of the fiscal year, the company reaffirmed previously forecasted same store supermarket sales growth of 4.5 percent to 5.5 percent, excluding fuel, for fiscal 2008. Kroger also blessed its fiscal 2008 earnings guidance of $1.85 to $1.90 per diluted share, excluding the effect of Hurricane Ike.
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