Jewelry retailer Kroger Co reported total sales increased 8.2 percent to $19.4 billion for the first quarter ended May 20, 2006. Identical supermarket sales increased 7.2 percent with fuel and 5.6 percent without fuel. This represents Kroger's eleventh consecutive quarter of positive identical supermarket sales, excluding fuel.
Net earnings in the first quarter totaled $306.4 million, or $0.42 per diluted share. During the quarter, the Company increased its reserves associated with legal proceedings arising from hiring practices at its Ralphs subsidiary during the 2003-2004 labor dispute. The current quarter charge reduced earnings by $0.03 per diluted share.
Current quarter results also include $0.02 per diluted share for stock option expense to reflect the Company's adoption of SFAS No. 123 (Revised 2004), Share-Based Payment.Net earnings in the year-ago period were $294.3 million, or $0.40 per diluted share.
"Kroger associates continue to focus on delivering improved service, selection and value to our customers and this has translated into another quarter of impressive identical sales growth. Our associates' commitment to our Customer 1st strategy enabled Kroger to pay - for the first time in 18 years - a quarterly cash dividend to shareholders," said David B. Dillon, Kroger chairman and chief executive officer.
Other highlights of the first quarter included:
- FIFO gross margin declined 61 basis points to 24.55% of sales. Excluding the effect of retail fuel operations, FIFO gross margin declined 9 basis points. Kroger continued to invest in lower prices for our customers. These targeted investments were partially funded by improvements in shrink, advertising, and warehousing expenses.
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