Cincinnati-based grocery store operator Kroger Co. has suffered a 16 percent dip in fourth quarter profits, despite posting a six percent gain in annual earnings.
Citing inflation as the main cause for the poor end-of-year performance, pointing specifically to the higher-than-expected five cents per share inventory share, Kroger does not believe the figures fairly reflect the reality.
The company also suggested that the previous year’s quarterly earnings were boosted by a tax benefit.
Nevertheless, Kroger posted earnings totalling $323 million for the fourth quarter ending February 2, which compares unfavourably with the $385 million reported a year earlier.
Positive
However, the company directors are not worried about the report, with chief executive and chairman David Dillon announcing that the company has gained in 37 of 44 major competitive markets.
Importantly, he also said that it had fared well in market competition with retail giant Wal-Mart Stores Inc. “These consecutive year-over-year gains in market share are significant because they show Kroger’s long-term strategy is working,” added Mr Dillon.
Better news for Kroger came in the shape of its annual profits which rose to $1.18 billion - $700 million ahead of the previous year.
Total revenue grew as well by a very healthy 2.2 percent to a total figure of $17.2 billion.
Mr Dillon made it clear that even in the current uncertain economic climate, the company’s commitment to customers remained paramount. “During the [fourth] quarter [of last year], we continued to invest in lower prices for our customers, providing meaningful savings for them in this uncertain economic environment,” he asserted.
Looking ahead, Kroger expects a positive year, hoping to post a growth figure of between three and five percent by the end of 2008.
March 12, 2008