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Kroger's profit beats expectations as storm response boosts sales

NEW YORK, N.Y. - Kroger said its ability to keep its supermarkets open and well-stocked as customers rushed to hoard groceries ahead of winter storms helped boost its results in the fourth quarter.

The nation's largest supermarket operator on Thursday said a key sales figure climbed for the period and issued a better-than-expected profit for the year ahead. The company, which operates, Ralphs, Fry's, Food 4 Less and other chains, noted that it sped up deliveries several days ahead of storms to ensure shelves would be replenished.

"In some cases, our associates even welcomed stranded travellers in extreme freezing conditions to spend the night in one of our stores," CEO Rodney McMullen said during a call with analysts, referencing instances where stores in Atlanta took in people.

That helps cultivate trust among customers that Kroger stores will be open when they're most needed, McMullen said.

The positive benefit of the winter weather is in contrast to many other companies that have cited the conditions for weaker results. At Kroger, executives noted that one of the benefits is that people don't stick to shopping lists when stocking up before storms.

Kroger, based in Cincinnati, has also fared better than its peers more broadly in adapting to intensifying competition. In particular, people are getting their groceries from a wider variety of places, including big-box retailers like Target, specialty chains like Whole Foods, drugstores and dollar stores.

To keep pace, Kroger has adapted its store formats, developing both larger and smaller locations to compete in different segments of the market. It's also trying to keep prices down and improve the in-store experience.

For the period ending Feb. 1, Kroger Co. said sales at established locations rose 4.3 per cent, excluding fuel.

By comparison, Safeway last month said the figure rose 1.6 per cent in its latest quarter. The company, based in Pleasanton, Calif., has put itself up for sale amid ongoing consolidation in the industry.

Kroger, which recently snapped up regional chain Harris Teeter, declined to comment on whether it's interested buying a piece of Safeway. Cerberus Capital Management, which last year led an investor group that bought five chains from Supervalu, also declined to comment on its interest.

For the quarter, Kroger earned $422 million, or 81 cents per share. Excluding one-time items, it earned 78 cents per share, topping the 72 cent per share Wall Street expected.

Revenue slipped to $23.22 billion, reflecting the shorter quarter with one less week compared with last year. But the results were above the $23.15 billion analysts expected.

The company also said it expects to earn between $3.14 and $3.25 in the year ahead, which is more than the $3.12 analysts expected.

Shares of Kroger were up 2 per cent at $44.63.

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Follow Candice Choi at www.twitter.com/candicechoi

The Canadian Press


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