Print |
E-mail to a friend
NEWS BRIEFS
Grocer Kroger backs earnings guidance
CINCINNATI (AP) — Kroger on Wednesday confirmed its earnings guidance for the year and said a key sales measure is trending higher, even as U.S. consumers are cutting back on spending.
The nation’s largest traditional grocery chain said identical supermarket sales growth, a key retail indicator that tracks stores open at least five quarters, was running above 5 percent, not including fuel sales, for the current quarter. Kroger said sales in the second four weeks of the quarter that began Aug. 17 were stronger than in the first four weeks.
Kroger, hosting an investors’ conference, backed its earlier fiscal 2008 earning guidance of $1.85 to $1.90 per share, excluding the effects of Hurricane Ike in September. Analysts surveyed by Thomson Reuters are expecting $1.92.
Kroger also confirmed its same-store supermarket sales growth projection for the year of 4.5 to 5.5 percent.
“Kroger has the right strategy in place to continue to serve our customers, associates and shareholders during this challenging economy,” David B. Dillon, chairman and CEO, said in a statement that noted the “solid identical sales growth.” He added that Kroger has sufficient liquidity to take care of short-term borrowing needs, which some corporations are having trouble meeting because of the nation’s credit crisis.
Kroger has been adding to regular-customer incentives for grocery discounts and cheaper gas at its stations, while expanding store-brand items usually priced lower than national brands and offering more prepared meals for people cutting back on restaurants.
“In this uncertain economy, we are delivering value to shoppers on any budget,” Dillon said.
Kroger shares were down Wednesday afternoon at $24.71, off 96 cents or 3.7 percent. They have traded in a 52-week range of $22.30 to $30.99.
Earlier Wednesday, the Commerce Department reported that retail sales fell 1.2 percent in September, demonstrating that U.S. consumers were watching their spending.
Kroger’s statements came one day after rival Supervalu Inc. reported that its profit fell nearly 14 percent in its second quarter. The Minneapolis-based chain cut its 2009 profit guidance by 4 cents per share.
Kroger last month reported that its second-quarter profit rose 3.4 percent.
John Heinbockel, a Goldman Sachs analyst, said Wednesday he remains “relatively bullish” on food retailers, led by Kroger and Safeway Inc., which he said have solid fundamentals and attractive valuations.
“We see two silver linings from the current weak economy — rising private label penetration and share gains from restaurants,” he wrote in a research note.
Kroger has said it’s too soon to estimate an impact from Hurricane Ike and its remnants on second-half results. The storm disrupted Kroger operations in Texas and several inland states including Ohio, causing wind damage and power outages that forced some stores and plants to shut down temporarily and lose outage-spoiled food.
Cincinnati-based Kroger operates 2,474 supermarkets and multi-department stores in 31 states, under two dozen local banners that include Ralphs, Fred Meyer, Food 4 Less, Fry’s, King Soopers, Smith’s, Dillons, QFC and City Market.
———
On the Net:
www.kroger.com
