Update: Kroger sees ‘strong’ Q1, raises fiscal 2014 guidance
CINCINNATI — Starting off the year with a strong momentum, Kroger posted a 9% increase in first quarter sales, which marked the first period that includes Harris Teeter in the statement of operations. Based on its strong quarter, the company has raised its fiscal 2014 guidance.
Total sales increased 9.9% to $32.96 billion in the first quarter compared with $30 billion for the same period last year. Total sales, excluding fuel, increased 11.4% in the first quarter over the same period last year.
Net earnings, including charges related to pension obligations, totaled $501 million, or 98 cents per diluted share, and identical supermarket sales growth, without fuel, of 4.6% in the first quarter of fiscal year 2014.
When discussing identical sales for the quarter, the company noted that in pharmacy they continued to see “strong performance both from a script count and a sales basis.” Specific details were not disclosed.
Excluding charges, Kroger’s adjusted net earnings were $557 million, or $1.09 per diluted share, for the first quarter. Net earnings in the same period last year were $481 million, or $0.92 per diluted share.
"Kroger associates continue to enhance our connection with all customers and achieve our key performance measures, which are allowing us to achieve our growth strategy and create shareholder value," stated Rodney McMullen, Kroger’s CEO. "Our strong first quarter results set us up to deliver a 12% to 15% net earnings growth rate for the year, partly due to the benefit of Harris Teeter, compared to our long-term growth rate of 8% to 11% plus the growing dividend. We are pleased to start the year with growth momentum while also returning $1.1 billion in cash back to shareholders this quarter through our buyback program."
During a call with analysts Thursday morning to discuss results, McMullen said that the company is seeing a rebound in consumer confidence as the economy shows signs of improvement.
“We are seeing strong, positive indicators in shopping behavior. Our customers have exhibited less cautious spending behavior, for example. Consistent with rise in consumer confidence index in May, our own customer research tells us that more customers perceive the economy to be in recovery,” McMullen told analysts. “While it is obviously welcomed news, the recovery remains fragile, especially for customers on a budget.”
The company stated that its strong financial position allowed it to return more than $1.9 billion to shareholders through share buybacks and dividends over the last four quarters. During the first quarter, Kroger repurchased 25.7 million common shares for a total investment of $1.1 billion. This was contemplated in the company’s original guidance.
Based on the first quarter results, the company raised and narrowed its adjusted net earnings guidance to a range of $3.19 to $3.27 per diluted share for fiscal 2014. The original guidance was $3.14 to $3.25 per diluted share. The company’s long-term net earnings per diluted share growth rate guidance is 8% to 11%, plus a growing dividend. Kroger raised its identical supermarket sales growth guidance, excluding fuel, to 3.0% to 4.0% for fiscal 2014. The original guidance was 2.5% to 3.5%.
In January, Kroger completed its merger with Harris Teeter. The transaction enabled Kroger to expand with the Harris Teeter brand and a base of 227 stores in the Southeastern and mid-Atlantic markets and in Washington, D.C. Harris Teeter continues to operate its stores under the Harris Teeter brand name as a subsidiary of Kroger. Harris Teeter had revenues of $4.7 billion for fiscal year 2013. According to Kroger, the company operates retail pharmacies in 1,947 of its food stores. The merger with Harris Teeter brought an additional 159 pharmacies to the Kroger portfolio.
During Thursday’s conference call, Michael Ellis, president and COO, said that the company’s merger with Harris Teeter is “going extremely well.”
“We are spending a lot of time with Harris Teeter and learning about how they connect with customers. Their store standards in fresh foods are world-class and our cultures are a great fit, which makes our integration rather easy. We are excited about what we are learning about Harris Teeter’s online ordering and store pick-up model; it is a program with a lot of promise,” Ellis said.
Travel immunizations now available at select Giant Food pharmacy locations
LANDOVER, Md. — Giant Food of Landover, Md., has announced that it is now offering pre-travel consultations and immunizations at select Giant Food stores.
Giant Food Travel Health Clinics, staffed by specially trained pharmacists, provide convenient, comprehensive pre-travel consultations. A pre-travel visit includes current and destination-specific recommendations for a $30 fee. Recommendations may include immunizations, prophylactic medications (such as anti-malaria drugs), and specific health advice to prevent and treat illness travelers may encounter. The clinics administer immunizations to help prevent hepatitis, yellow fever, measles, meningitis, polio, typhoid and other diseases.
“We pride ourselves in offering the highest quality service to support our pharmacy customers’ busy lives, and that includes travel abroad plans,” said Gayle Shields, director of pharmacy operations, Giant Food. “Whether it’s travel for business, service or study abroad, or leisure, our Travel Health Clinic pharmacists will work with each customer to provide specialized assistance and consultation customized to travel destinations.”
The Centers for Disease Control and Prevention notes that some diseases that are not common in the United States still exist in other countries — and even in airplanes and airports during layover travel. International travel continues to grow substantially and many travelers are unaware of the risks they face or how to minimize them.
Even if one’s family has all the recommended vaccines, “booster shots” are sometimes needed for vaccines that have become less effective over time. CDC recommends consulting with a travel medicine specialist, like those at Giant’s Travel Health Clinics, at least four to six weeks before departure.
Family Dollar names Jeffrey Thomas SVP, merchandise operations
MATTHEWS, N.C. — Family Dollar Stores has named Jeffrey Thomas as SVP, merchandise operations, succeeding Scott Zucker, who left the company at the end of May
Thomas will report to Jason Reiser, EVP, chief merchandising officer.
“For more than 54 years, our merchandise operations team has focused on providing the items our customers want and need at great everyday prices,” stated Reiser. “Jeff’s supply chain, logistics and replenishment experience along with his proven leadership skills will ensure that we continue to bring value and convenience to customers at each of our more than 8,100 stores across the country.”
Thomas joined Family Dollar in 2003 as a director of vendor performance with responsibility for item data integrity and vendor relationships. Between 2005 and 2013, Thomas assumed greater roles with increased responsibilities, and in 2013, he was named VP, merchant services.