Kroger’s comp streak continues, cap-ex to surge

3/3/2016

The lack of food price inflation which has affected the performance of many grocers had little impact on fourth quarter results at Kroger’s, a company whose string of quarterly same-store sales increases has now entered its 13th year.


Kroger chairman and CEO Rodney McMullen characterized the company’s performance as “outstanding” after the operator of nearly 2,800 stores said its identical supermarket sales excluding fuel increased 3.9% during the period ended Jan. 30. It marked the 49th consecutive quarter of identical store sales growth, an achievement made more notable by recent headwinds grocers have faced due to a lack of food price inflation.


“We delivered on our performance targets, grew market share, created 9,000 new jobs, supported our communities, and continued to expand our use of technology to drive growth,” McMullen said. “And we're not done. In 2016, we will continue making a difference for our customers and associates, growing our business, and delivering value for shareholders."


Kroger’s total sales including fuel and the acquired Roundy's chain increased 3.8% to $26.2 billion in the fourth quarter compared to $25.2 billion for the same period last year. If the impact of the Roundy’s deal and lower year over year fuel prices are excluded, Kroger’s total sales increased 4.4%. The solid sales growth translated to net income which advanced 7.9% to $559 million and earnings per share with increased 9.6% to 57 cents.


To keep the momentum going in 2016, Kroger said its capital expenditures would total between $4.1 billion and $4.4 billion. If expenditures hit the midpoint of that range, it would mark a 27% increase from the $3.3 billion spent in 2015 and the $2.8 billion spent in 2014. Kroger didn’t not provide a breakdown on how its capital expenditure budget would be allocated in 2016.


Kroger ended 2015 with total sales including fuel and the acquisition of Roundy’s, up 1.3% to $109.8 billion compared to $108.5 billion in 2014. Net earnings for 2015 totaled $2.04 billion, or $2.06 per diluted share.


In the coming year, Kroger’s expects its identical store sales streak to continue with expectations of a 2016 full year increase ranging from 2.5% to 3.5%. Profits are expected to range from $2.19 a share to $2.28 a share, consistent with the company’s long term targets to growth earnings per share in the range of 8% to 11%.




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