The Kroger Co. posted positive identical sales and adjusted earnings despite lower overall sales in its third quarter as it continues to address litigation and regulatory action related to its proposed merger with Albertsons Cos.
Company net earnings were $618 million, or 84 cents per diluted share, versus $646 million, or 88 cents per diluted share, in the year-before period. Adjusted for one-time events, company net earnings were $719 million, or 98 cents per diluted share, versus $698 million, or 95 cents per diluted share, in the year-previous period, Kroger noted.
A Yahoo Finance-published analyst consensus estimate called for earnings of 98 cents per adjusted diluted sales and revenue of $34.2 billion
Identical sales without the effect fuel price volatility increased 2.3% year over year, Kroger maintained. Sales were $33.63 billion versus $33.96 billion in the year-earlier quarter. Operating profit was $828 million versus $912 million in the year-prior period while adjusted operating profit was $1.02 billion essentially flat when compared to the annum-past quarter.
In announcing the financial results, Chairman and CEO Rodney McMullen said, “Kroger achieved strong sales results in the third quarter led by our pharmacy and digital performance, which reflects the strength and diversity of our model. We continued to grow total households this quarter by delivering exceptional value for customers, with low prices, personalized offers and great quality ‘Our Brands’ products, all through a seamless shopping experience.
“We appreciate our associates for their continued efforts to elevate the customer experience, delivering on our key priorities of full, fresh and friendly,” he continued. “While we expect the macroeconomic environment to remain uncertain near-term, the strength of our model gives us confidence in our ability to deliver value for customers and invest in our associates, while generating attractive and sustainable returns for shareholders.”
In addressing the pending acquisition of Albertsons Cos., McMullen said, “As we await the courts’ rulings in the regulatory challenge to the merger, we remain confident in the facts and the strength of our position. The food industry has always been competitive and will continue to be after this merger. We are committed to closing this merger because bringing Kroger and Albertsons together will provide meaningful and measurable benefits: lower prices, secure jobs and expanded access to fresh, affordable food for customers, associates and communities across the country.”
Kroger also reported it closed the sale of the company’s specialty pharmacy business on October 4, for $464 million. The sale reduced total company sales in the third quarter by $340 million year over year, and the company added annualized sales will be about $3 billion lower going forward. KSP was a low-margin business, the company asserted, so the sale of the business increased both Kroger’s gross margin and operating, general and administrative costs as a rate of sales. The sale had no material effect on operating profit, according to Kroger.
