Kroger 1Q profit surges 10 percent on higher sales

admin//June 26, 2007//

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CINCINNATI – Kroger Co., the nation’s largest traditional grocery store operator, said Tuesday its first-quarter profit surged 10 percent and announced its board has approved a $1 billion share buyback program.

For the three months ended May 26, earnings rose to $336.6 million, or 47 cents per share, from $306.4 million, or 42 cents per share, in the prior-year quarter.

Kroger said its latest results included charges of about 2 cents per share related to labor unrest at a distribution center. Results in the same period a year ago included a one-time legal expense of 3 cents per share.

Quarterly sales increased 7 percent to $20.73 billion, from $19.42 billion.

Analysts surveyed by Thomson Financial, who typically exclude one-time items in their forecasts, predicted earnings of 48 cents per share on sales of $20.4 billion.

Same-stores sales, which measures sales at stores open at least a year, rose 6 percent including motor fuel sales and 5.2 percent without motor fuel. Same-store sales is a key measure of retailer performance, because it excludes the potentially distorting impact of sales at newly opened or recently closed stores.

Kroger confirmed its fiscal year 2007 earnings guidance of $1.60 to $1.65 per share.

The supermarket owner said the new buyback program replaces a $500 million stock buyback announced in May 2006, Kroger said.

The company plans to use free cash flow to fund the buyback.

Kroger shares fell $1.26, or 4.2 percent, to $28.40 in morning trading.