Kroger cost controls protect profits as food prices fall
Kroger Co, the biggest U.S. supermarket company, posted a better-than-expected rise in quarterly profit after it kept a tight lid on costs. Shares in the owner of chains such as Ralphs, Food 4 Less and Fred Meyer were up 1 percent to $36.06 in af...
Kroger Co, the biggest U.S. supermarket company, posted a better-than-expected rise in quarterly profit after it kept a tight lid on costs.
Shares in the owner of chains such as Ralphs, Food 4 Less and Fred Meyer were up 1 percent to $36.06 in afternoon trading.
Net income attributable to Kroger rose about 10 percent to $680 million, or 70 cents per share, in the first quarter. That was a penny per share higher than analysts' average estimate, according to Thomson Reuters I/B/E/S.
Total operating expenses, excluding fuel and results from newly acquired Roundy's stores, fell 4 basis points as a percentage of sales from the year earlier period.
Total sales were up 4.7 percent to $34.6 billion after consumers made smaller, but more frequent shopping trips during the quarter, when commodities such as meat, dairy and produce became more affordable.
The Cincinnati-based company operates 2,778 retail food stores in a brutally competitive industry where its rivals include Whole Foods Market Inc, Wal-Mart Stores Inc and Amazon.com Inc, as well as convenience and dollar stores.
The company, like many others, is investing in digital shopping technology in a bid to edge out competitors.
It recently merged with Harris Teeter and used that grocer's know-how to build ClickList, a program that allows shoppers to order online and pick up their purchases at Kroger stores. It also is experimenting with ship-to-home services through its acquisition of Vitacost.com.
Executives also signaled interest in meal kit services, such as those offered by Blue Apron, saying they were "very open" to creating their own or partnering with an existing provider.
The company's first-quarter sales, excluding fuel, rose 2.4 percent at stores open for more than a year without expansion or relocation, slightly below analysts' average estimate of a 2.5 percent rise, according to research firm Consensus Metrix.