CINCINNATI — Kroger posted its 32nd consecutive same-store sales gains as the grocer continues to grab market share due to a combination of a customer service initiative and value pricing.
"On-going market share gains are a product of Kroger’s Customer First strategy, where the company focuses on driving cost savings to reinvest in its four keys: prices, people, products and shopping experience," said Charles Grom, Deutsche Bank research analyst. "We believe the company has been particularly focused on investing in price and driving a pricing gap with conventional competitors. … The company’s lower prices are increasingly important to today’s more value-focused consumer."
During a recent price survey conducted by Credit Suisse in the Chicago and Dallas markets, Walmart has been widening its price gab between competitors with two exceptions — one of them being Kroger (the other being Target).
Kroger on Thursday reported a third-quarter sales increase of 10.3% to $20.6 billion, including fuel. For the period ended Nov. 5, total sales excluding fuel were up 5.1% over last year, the grocer reported.
Identical supermarket sales, without fuel, increased 5% in the third quarter over the same period last year.
Coming out of the third quarter, Kroger increased its diluted earnings per share guidance to $1.95 to $2.00 for the full year. Previously, the range was $1.85 to $1.95. The company also raised the low end of its identical supermarket sales growth guidance, excluding fuel, to 4.5% to 5% for the year. Previously, identical supermarket sales were expected to range from 4% to 5%.
Kroger also is bullish looking ahead to 2012, in part because of the generic wave that's coming. "In terms of pharmacy, we're just delighted with our trend and where we are," said Rodney McMullen, Kroger's president and COO. "As you look out to 2012, there's a lot of major drugs that will move out to generics. ... The growth profit rate will be helpful."