KR 2010 Q1 Earnings - by BetterTrades

Prior to the opening bell on June 23, one of the nation’s largest grocery operators, Kroger Co. (KR) confirmed that the company profits during the 1Q surged more than 10%, as economy affected shoppers continued to eat at home and seek bargains at the store.

For the most recent period, Kroger recorded net income of $435.1M, or $0.66 per share, in contrast to last year’s profits during the 1Q of $386M, or $0.58 per share, an increase in earnings of 12.7%.

Quarterly sales for Kroger came in at $22.8B, down marginally from the prior year’s tally of $23.1B. The company stated that the decline in overall revenues was a result of lower gas prices at their service stations. During the quarter, the price of retail gas at Kroger owned pumps was lower by 41% than the same time a year ago.

In the meantime, analysts within the industry were anticipating the grocer to book net income of $0.62 per share on overall revenues of $23.28B.

Looking further into the company’s earnings release, Kroger made it known that a key economic retailer gauge, same store sales, jumped more than 3% year-over-year, including fuel sales. Excluding fuel sales, revenues decreased less than 1% at $21.31B.

Operating profits for the quarter increased 3.7% of overall sales, or $843.9M, compared to the previous year’s earnings of $769.1M, or 3.3% of total sales. Meanwhile, general and administrative expenses jumped to $4.03B, or 17.7% of overall sales. That’s up from the prior year’s tally of $3.89B, or 16.8% of total sales.

"What we believe is happening is customers are buying what they need when they need it, closer to when they need it, to make sure that their dollars stretch further to the end of the month or the end of the pay period," stated David Dillon, chairman and CEO at Kroger.

Kroger currently operates nearly 2,500 multi-department stores and supermarkets in 31 states nationwide. Sales of the company’s store-owned brands surged during the quarter, growing at a double-digit rate and accounting for nearly 35% of the all grocery items sold.

Dillon went on to add, "Customers continue to look for value, and Kroger is helping them save money by offering a unique combination of products and services no other competitor can match. By paying close attention to the changing needs of today's shoppers, Kroger continues to refine what it offers customers through lower prices, friendly service and innovative stores that are appealing and convenient."

For 2009, Kroger reaffirmed their outlook for annual earnings, in which the company is expecting to post net income between $2.00 and $2.05 per share, while analysts are projecting earnings to be $2.03 per share for the year.

At the end of the trading session, shares of Kroger slipped nearly 2%, losing $0.81 to end the June 23 session at $45.52 per share. Over the past year, shares of KR have traded as high as $30.99 per share and as low as $19.39 per share.

By BetterTrades