CINCINNATI - Kroger shareholders took to the microphone Thursday at the company's annual meeting here to thank Chairman and Chief Executive Officer David Dillon for reinstituting the company's quarterly cash dividend.
The dividend, which the company paid earlier this month, was Kroger's first since 1988.
Dillon told shareholders to expect more positive news. The board on Thursday voted to pay a second dividend of $.065 per share on Sept. 1. Dillon said the company intends to continue paying a quarterly dividend and hopes to increase the amount. Dillon likewise told shareholders to expect earnings per share growth of 6%-8% this year.
Dillon's optimism is based on strong performance last year despite steep competition. Nearly 70% of Kroger's stores are located in one of its 44 major markets, which the company defines as markets where it operates nine or more stores. During 2005, Kroger's overall share in those markets grew more than 35 basis points, on a volume-weighted basis.
"Even in the face of aggressive supercenter expansion, Kroger continued to grow," said Dillon, noting that Kroger competes against 1,129 supercenters. Supercenters have achieved at least a No. 3 position in 32 of Kroger's major markets.
Despite that competition, Kroger's market share in those 32 markets grew by more than 50 basis points last year, on a volume-weighted basis.
Kroger attributed its strong performance to its "customer-first" strategy. The strategy emphasizes improving the shopping experience, ensuring the right products are in stock every day, being "first to market" with new products, delivering value on frequently purchased items and managing costs. Dillon also praised the success of Kroger's private brands, which comprise about 24% of sales.
On-site fuel centers have likewise part of the company's strategy. Because not every store can accommodate a fuel center, the company is exploring the idea of locating Kroger fuel centers at adjacent or nearby locations, Dillon said.
In other business, Kroger shareholders approved proposals allowing for the annual adoption of all directors, the elimination of cumulative voting for directors and the elimination of a 75% super-majority requirement for some transactions.