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Kroger Q4 profit beats Street; lifts outlook

BY Dan Berthiaume

Cincinnati – The Kroger Co. earned a better-than-expected $422 million in its fourth quarter, down from $462 million in the year-ago period, which included an additional week of sales. The nation’s largest supermarket operator issued a better-than-expected profit for the year ahead.

Kroger’s fourth quarter’s results included expenses related to the company’s $2.5 billion acquisition of Harris Teeter Supermarkets, which closed on January 28, 2014. The quarter’s results also include a LIFO charge of $9.7 million, compared to LIFO credit of $41.2 million in the year-ago period.

Sales for the fourth quarter, ended Feb.1, totaled $23.2 billion, also topping Street estimates, compared to $24.1 billion last year. After adjusting for the extra week, total sales went up by 4.8% (without fuel, total sales increased 4.4%). Same-store sales increased 4.3%, excluding fuel.

The company said its results were enhanced by its response to the harsh winter weather in the fourth quarter.

For the full year, Kroger reported total sales of $98.4 billion, an increase of 3.9% after adjusting for the 53rd week last year. Net earnings for fiscal 2013 totaled $1.52 billion.

Kroger’s full-year net earnings beat Wall Street expectations and were aided by sales from more than 200 Harris Teeter stores acquired in the fourth quarter.

The supermarket operator anticipates same-store sales growth, excluding fuel, of approximately 2.5% to 3.5% for fiscal 2014.

"Our associates’ connection with customers fueled another year of market share growth and record earnings per share," said Rodney McMullen, Kroger’s CEO. "Kroger’s Customer 1st strategy is a powerful foundation on which to continue growing and differentiating our business in 2014."

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Bon-Ton to build e-commerce fulfillment center

BY Dan Berthiaume

York, Pa. – The Bon-Ton Stores Inc. has signed a lease with Duke Realty Corp for a 743,000-sq.-ft., automated, direct-to-consumer fulfillment center in West Jefferson, Ohio, to support its growing e-commerce operations. The company anticipates the facility to be fully operational and ship its first orders in spring of 2015.

The new facility will consolidate the e-commerce fulfillment that is currently being performed at Bon-Ton’s four distribution centers. When fully operational, the fulfillment center will employ approximately 139 net new Ohio associates, with additional seasonal jobs expected to be created during the peak holiday shopping season.

“In response to the rapid growth in our e-commerce business, we are taking this step to ensure extraordinary service to our customers,” said Brendan Hoffman, president and CEO, Bon-Ton Stores. “This new fulfillment center will permit significant expansion of our shipping capacity with improved operational efficiency.”

The consolidation will impact associates involved in the direct-to-consumer fulfillment at the company’s four distribution centers. Affected associates will be offered the opportunity to interview for available positions at the new West Jefferson facility or receive career transition benefits, including severance, according to established practices and state employment service support. Bon-Ton does not expect that the combined severance and other expenses associated with the consolidation, which it expects to incur over the next 16 months, will be material.

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Google Capital invests $50 million in Auction.com

BY Staff Writer

Irvine, Calif. — Auction.com, the world’s largest online real estate marketplace, has received a $50 million investment from Google Capital. As part of the investment, one representative from Google Capital will join the company’s board of directors and another will take a board observer position.

“Google is the world’s greatest Internet company and we’re thrilled to have the opportunity to work closely with them. This will give us an opportunity to tap into their deep expertise in digital marketing and mobile, as well as in building world-class products,” said Jeff Frieden, CEO and co-founder of Auction.com. “More than $7 billion of commercial and residential real estate traded through our online marketplace in 2013, and we believe that having Google Capital’s support will help us expand our industry leadership, and carve out a bigger share of the global real estate market.”

Google Capital joins other strategic shareholders in Auction.com including Starwood Capital Group, Starwood Property Trust, Stone Point Capital and funds managed by affiliates of Fortress Investment Group. Auction.com annually handles tens of thousands of transactions across commercial and residential real estate for customers ranging from the largest financial institutions to individuals and brokers.

“Auction.com has quietly built one of the largest marketplaces on the web,” said David Lawee, partner at Google Capital. “We think Auction.com can fundamentally change how real estate, and particularly commercial real estate, can be bought and sold, leveling the playing field for smaller investors.”

Google Capital was formed in 2013 and previously invested in Survey Monkey, Lending Club and Renaissance Learning. It is a growth equity fund backed by Google. Google Capital invests in companies that use technology to change the way people experience the world. JPMorgan Securities LLC served as sole private placement agent for Auction.com in conjunction with the transaction.

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