CINCINNATI -- Kroger Co. reported record sales and strong earnings for the third quarter ended Oct. 8.
on. Adjusting last year's third-quarter results to reflect the sale of 13 Kroger units in San Antonio to Mesa, Ariz.-based Megafoods Stores, sales from supermarkets for the quarter rose 5.6%, compared with 3.2% a year ago, the company noted. Same-store sales increased 2.3% for both the quarter and the year to date.
Net income for the quarter rose 120% to $36 million following an extraordinary charge of $15.2 million for early retirement of debt. For the year to date Kroger reported net income of $150.7 million following an extraordinary charge of $26.2 million, compared with a net loss of $94.9 million.
Operating cash flow rose 10.1% for the quarter to $274.8 million and 9.6% for the year to date to $773.5 million.
Joseph A. Pichler, chairman and chief executive officer, said third-quarter results reflected "the positive effects of the company's accelerated store construction, improvements in productivity, cost reductions in procurement and distribution and the payback from investments in new technologies.
"We had with excellent same-store sales growth, a strong performance from Kroger-label brands and firm cost discipline throughout the organization."
Net interest expense declined 16% during the quarter to $100.7 million from $119.9 million; long-term debt at the end of the quarter was $3.9 billion, compared with $4.2 billion a year ago.
Chuck Cerankosky, a securities analyst with Hancock Institutional Equity Services, Cleveland, said Kroger was able to achieve strong earnings results "by continuing to pay close attention to sales, as it has for several years. The real payoff from that approach has come as the economy has recovered. Customers who gravitated to Kroger stores during the recession have become part of a loyal customer base, and as they begin to trade up, we're seeing positive operating leverage for Kroger."