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CINCINNATI -- The Kroger Co. reported total sales increased 8.2 percent to $19.4 billion for the first quarter ending 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.
"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," said David B. Dillon, Kroger chairman and chief executive officer. "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."
Net earnings in the first quarter totaled $306.4 million, or $0.42 per diluted share, and 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 now expects identical supermarket sales growth, excluding fuel sales, to exceed 4 percent for the balance of the year, after originally forecasted identical supermarket sales growth, excluding fuel sales, in excess of 3.5 percent for fiscal 2006.
Kroger's original guidance for earnings per share growth in 2006 of 6 to 8 percent did not contemplate the need to increase legal reserves. Based on first quarter results, the company's guidance for earnings per share growth in 2006 remains at 6 to 8 percent, including the increase in legal reserves. Absent the need to increase these reserves, Kroger's projected earnings per share growth rate would be 9 to 11 percent for fiscal 2006.
"Our results this quarter can be tied directly to the contributions of our 290,000 associates," said Dillon. "We appreciate their hard work and thank them for making strides in several key areas, including continually improving our customers' shopping experience."