Kroger earnings and sales up for quarter, year

by Bryan Salvage
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CINCINNATI — The Kroger Co.’s net earnings totaled $349.2 million, or $0.53 per diluted share, for the fourth quarter of fiscal 2008 ended Jan. 31, compared with net earnings of $322.9 million, or $0.48 per diluted share, in the same period last year. Total fourth-quarter sales were $17.3 billion compared with $17.2 billion for the same period last year. Excluding fuel sales at the company's supermarket fuel centers and convenience stores, total sales increased 4.4% over the prior year. Identical supermarket sales, excluding fuel, increased 3.8% over the same period last year.

Net earnings for fiscal year 2008 were $1.25 billion, or $1.90 per diluted share. Net earnings in fiscal 2007 were $1.18 billion, or $1.69 per diluted share. Current year results include expenses for damage and disruption caused by Hurricane Ike in the third quarter. Excluding these hurricane-related expenses, fiscal year 2008 net earnings were $1.27 billion, or $1.92 per diluted share. These results represent year-over-year growth of 13.6%. On top of that growth, Kroger's quarterly dividend added over 1% to total shareholder return.

For fiscal year 2008, total sales increased 8.2% to $76.0 billion over the same period last year. Identical supermarket sales, excluding fuel, rose 5.0% compared with the same period a year ago.

Approximately 27% of Kroger's fourth-quarter grocery revenue came from sales of its exclusive Kroger brands and Kroger brands reached a record-high 35% of grocery unit sales. All three tiers of the company's $12.5 billion Kroger brand portfolio experienced strong growth during the quarter. Growth was exceptionally strong for the Value and Private Selection tiers. Kroger banner brands experienced their strongest year-over-year growth during the quarter.

Kroger made significant gains in market share during 2008. In its major markets, the company gained 61 basis points of additional market share, according to the internal methodology Kroger has used consistently to estimate its market share. This is the fourth-consecutive year Kroger has achieved significant market-share gain. Over the past four years combined, Kroger's share in its major markets has increased roughly 225 basis points.

Kroger is forecasting identical supermarket sales and earnings per share growth in 2009. The company now expects full-year identical supermarket sales growth, excluding fuel, of 3% to 4% for fiscal 2009. This guidance reflects the company's outlook for product cost inflation of 1% to 2% compared to its earlier forecast of 2% to 3%.

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