KROGER SALES ACHIEVE RECORD, NET UP 14%

LISA A. TIBBITTS

CINCINNATI -- Kroger Co. here reported that sales rose 5.5% to a record $5.7 million from $5.4 million in the second quarter ended June 17.

Same-store sales increased 1.5% during the quarter.

Net earnings increased 14.4% to $77 million from $67.3 million.

Kroger said its second-quarter results included an extraordinary charge of $5.5 million related to the early retirement of debt.

In the year-to-date, sales increased 3.7% to $11.1 million from $10.7 million. Same-store sales were up 1.3%.

Net earnings jumped 18.7% to $136.2 million from $114.7 million.

Joseph A. Pichler, Kroger's chairman and chief executive officer, said the company's strong performance was achieved "by controlling distribution and logistics costs through the implementation of new technologies, by strong sales in existing stores and by achieving better than expected sales in newly opened stores."

Kroger plans to expand retail square footage by 5% this year, as reported. The company said it will complete 55 to 60 store openings and expansions in the second half.

J.P. Morgan Securities, New York, recently raised its rating on Kroger stock from buy to strong buy "because the company's beginning to get a much better return on investment when it's opening new stores," said analyst Mark Husson.

"Kroger is sacrificing pricing in terms of comp-store sales to reach for a greater prize. They care about the long-term health and profitability of the business," he continued.

Husson noted that most of Kroger's new stores became profitable during the second quarter, whereas other retailers' stores often do not reach profitability until the third quarter.

Citicorp Securities, New York, has also rated Kroger's stock as strong buy, said Margaret Cannella, research director.

"[Kroger continues] to sustain an industry-leading performance primarily by keeping good control of their costs, through excellence in the implementation of all kinds of new technology and through generating higher throughput in their existing stores and their new stores," she told SN.

2ND-QUARTER RESULTS

Qtr Ended 6/17/95 6/18/94

Sales $5.7 million $5.4 million

Change 5.5%

Same-store 1.5%

Net Income $77 million $67.3 million

Change 14.4%

Inc/Share 63 cents 55 cents

24 Weeks 1995 1994

Sales $11.1 million $10.7 million

Change 3.7%

Same-store 1.3%

Net Income $136.2 million $114.7 million

Change 18.7%

Inc/Share $1.10 94 cents