Kroger's Profits Up 30%

CINCINNATI-Boosted by strong food and fuel sales and the improved performance by its California operations, Kroger Co. saw its profits jump by 30% in the third quarter of 2005.

The nation’s largest supermarket chain earned $185.4 million or 25 cents per share during the quarter ending Nov. 5, an increase of nearly $43 million over the same period a year earlier when it earned $142.7 million or 19 cents per share. Revenues rose 9.1% to $14.02 billion during the three month quarter, up from a year earlier when the company reported $12.9 billion in sales.

“We had growth across all of the country and across all major categories,” said Rodney McMullen, the company’s vice chairman, in announcing the third quarter results in a conference call with investors and analysts Tuesday.

Same-store supermarket sales, a key indicator of a retailer’s strength, increased for the ninth straight quarter to 6.6% including fuel sales and 3.7% when fuel sales were excluded, marking the highest quarter for comparative store sales since 1999, the company said.

Sales at Kroger’s Ralphs and Food 4 Less stores in Southern California also showed improvement in the third quarter, but sales were slower than it would like, chief executive David Dillon said. The company is still recovering from a nearly five-month strike and lockout in some areas of that state that ended in February 2004.

Dillon said the company continues to focus on improved customer service, selection and value while trying to cut costs to maintain its edge in the highly competitive grocery business that has become even more aggressive in recent years with the entry of Wal-Mart and other discounters.

The Cincinnati-based grocery chain, which operates about 1,510 grocery stores multi-department stores in 32 states under 24 local flags, also raised its guidance for 2005. Execs said the company should bring investors yearly earnings of more than $1.24 per diluted share.