Private Label Boosts Sales, Profits for Kroger

Record growth in store-brand sales, fueled by cash-strapped consumers in a troubled economy, drove sales and profits for Kroger's fiscal 2008 fourth quarter and full year.

"Our customers recognize and appreciate the quality and value of our comprehensive store brands, which today number more than 14,400 items," said David B. Dillon, Kroger chairman and CEO, during an earnings conference call yesterday. "We leverage our manufacturing and procurement capabilities to innovate and introduce new items that add value for our customers."

Dillon said that during the fourth quarter, 27 percent of Kroger's grocery sales came from its store brands and grocery, and unit sales of Kroger brands reached a record high of 35 percent of total grocery units. "These results continue the exceptionally strong growth in Kroger brands we saw in the third quarter, and as expected, Private Selections exceeded $1 billion in 2008," he noted. "In addition, our Value brands enjoyed strong growth as well. Once again, our $12.5 billion Kroger brand portfolio enjoyed strong year-over-year growth and fueled Kroger's overall grocery volume growth in 2008."

Kroger's fourth quarter sales were $17.3 billion, up from $17.2 billion for the same period last year. Excluding fuel sales, total sales increased 4.4 percent over the prior year. Identical-supermarket sales, excluding fuel, increased 3.8 percent.

The retailer's net earnings totaled $349.2 million, or 53 cents per share for the quarter ended Jan. 31, 2009, compared with $322.9 million, or 48 cents per share last year.

Sales for the fiscal year increased 8.2 percent to $76 billion over last year. Identical-supermarket sales, excluding fuel, rose 5 percent compared with a year ago. Net earnings were $1.25 billion, or $1.90 per share, up from $1.18 billion, or $1.69 per share last year.

Cincinnati-based Kroger operates 2,481 supermarkets and multi-department stores in 31 states.
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