CINCINNATI — Saying it dialed down price investments and made more sales of higher-end items, Kroger here on Thursday posted quarterly earnings that exceeded analyst estimates.
The retailer said non-fuel identical sales grew 2.4% in the fiscal first quarter, which ended May 22, with total sales up 8.7% to $24.8 billion. Net earnings of $373.7 million were down 14% from the same period last year although earnings per share of 58 cents exceeded analyst estimates of 55 cents. Kroger stock was up by more than 3%.
“The numbers don’t lie: They needed less gross margin investment and got better sales productivity,” Andrew Wolf, an analyst at BB&T Capital Markets, Richmond, Va., told SN. “That, to me is a sign that Kroger, and probably the rest of the industry, has bottomed. Demand is up. And so Kroger, and I suspect likely others as well, are going to be able to achieve better results going forward.”
Kroger officials in a conference call credited investments in service, products and prices for improving the company’s overall competitive position, noting that each of its 18 supermarket divisions experienced positive identical-store sales during the quarter. Kroger saw increased sales in discretionary categories including general merchandise, floral, Starbucks coffee, better deli meats and natural/organics, but officials emphasized that not all Kroger shoppers were contributing to that growth. In fact, many shoppers remained strongly influenced by price.
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