Kroger 'Upbeat' with Q4 Results

JON SPRINGER

CINCINNATI — Stock in Kroger Co. here was trading up more than 3% Thursday after the retailer posted increases in sales, market share and earnings for the fourth quarter.

David Dillon, Kroger’s chief executive officer, in a conference call said he was "more upbeat" than he was when reviewing the company's third-quarter results in December. This, he said, reflected Kroger's performance in an environment that is recovering more slowly than expected. "We see some promising signs of improvement, but the recovery remains fragile," he said. "Unemployment is high in most of our markets and food stamp use continues at its peak."

Net earnings of $278.8 million, or 44 cents per share, improved 9% as sales jumped 7.4% to $19.9 billion for the period, which ended Jan. 29. Identical-store sales excluding fuel improved by 3.8% in the quarter as each of Kroger's 18 retail divisions saw positive sales results, and each supermarket department saw sales increases including general merchandise and drugs — categories that had softened in the height of the recession.

Identical sales were boosted by more frequent shopping trips and a estimated 2.3% estimated rate of overall inflation. Quarterly inflation in the grocery department of 1% marked a reversal of six consecutive quarters of deflation, officials added.

"We are passing along product cost increases from national brand suppliers in grocery today and we plan to continue to do so," Rodeney McMullen, Kroger's chief operating officer, said, noting that Kroger would push its own-brand products as an alternative for shoppers whose habits could change with inflation. For the fiscal year Kroger reported net income of $1.1 billion on sales of $82.2 billion. Sales improved by 7.1% overall, and non-fuel ID sales improved by 2.8%.