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Customer still economy-sensitive, Kroger suggests with positive Q2

BY Michael Johnsen

CINCINNATI — Trips are up, but baskets are down, Kroger reported Friday morning, along with positive second-quarter results. Gas sales also are up with the decline in fuel prices, which is an item Kroger continues to use as a stickiness factor with its loyalty card program.

"Easing fuel prices in Q2 should enhance the profitability of Kroger’s fuel business — higher fuel margins and lower interchange fees — and help the company cycle its most difficult comparison of the year," noted Credit Suisse analyst Ed Kelly. "While the stock has meaningfully outperformed its peers and the market so far this year, and investors have begun to reward the company for its differentiated performance, we believe its solid fundamental momentum, attractive valuation and defensiveness/lower volatility continue to make the stock an attractive investment."

Kroger has been focusing on driving its loyalty household growth rate, which "grew at a faster rate than total household growth, which is also up for the quarter," Rodney McMullen, Kroger COO, told analysts Friday morning. Loyalty households, which represent greater profitability at the expense of local competitors, are defined by a combination of visits and how much a consumer spends, along with research on where those customers are shopping beyond Kroger.

Kroger reported total sales, including fuel, were up 11.5% to $20.9 billion in the second quarter ended Aug. 13. Identical supermarket sales, without fuel, increased 5.3% in the second quarter over the same period last year. This marks 31 consecutive quarters of identical supermarket sales increases for Kroger.

“We are pleased with Kroger’s strong performance this quarter, which we believe is the outcome of our consistent approach to managing the business and executing our Customer 1st strategy,” stated David Dillon, Kroger’s chairman and CEO. “Our ongoing investments in the four keys — our people, products, prices and the shopping experience — continued to enhance our connection with customers and drive positive identical sales growth.”

At the end of the conference call, Dillon noted that Kroger and all employees would remember the 10th anniversary of 9/11 at precisely 8:46 a.m. on Sunday morning with a moment of silence. Dillon shared that one of his store managers, Tim Dowdell, whose brother Kevin was one of 343 emergency services personnel to sacrifice their lives that day, "displays the [American] flag at his store prominently every day, and I love that."

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BioPlus appoints new director of payer relations

BY Alaric DeArment

ALTAMONTE SPRINGS, Fla. — BioPlus Specialty Pharmacy has hired Brenda Gauthier as its director of payer relations, the company said.

BioPlus said that in her new position, Gauthier, who has worked in specialty infusion for 18 years, would develop and maintain relationships with key payers and other entities. BioPlus said Gauthier had designed and executed many cost-effective, revenue-generating ideas, such as ways of improving reimbursement and cash flow like workshops, reference guides and training programs.

"Brenda’s close relationship with the nation’s leading health plans is one of the reasons we are excited by her joining our managed care team," BioPlus chief strategic officer Russell Gay said. "She has built a reputation as a trusted innovator who builds partnerships by melding our services to the needs of the plan, as well as that of the member."

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Walgreens mobilizes Facebook fan base to drive flu voucher program

BY Michael Johnsen

DEERFIELD, Ill. — With more than 1 million fans on Facebook and the largest following on Foursquare among chain drug store retailers, Walgreens is using these social media platforms to let its customers help distribute more than $6 million in free flu shot vouchers to five national charities, the Chicago-area chain announced Friday.

Walgreens is working with the American Diabetes Association, AmeriCares, Feeding America, League of United Latin American Citizens and the National Urban League on an initiative to help provide up to 200,000 flu shot vouchers.

Vouchers are for distribution to uninsured and underinsured individuals, as well as those who are unable to afford a flu shot without the voucher.

“Walgreens continues to play a leading role in providing flu shots and access to other important, preventive health care services for those in need throughout the U.S.,” Walgreens chief marketing officer Kim Feil said. “Our objective during flu season is to protect as many people as possible. This program gives people a unique opportunity to have a voice as part of our mission to help everyone in America stay well throughout the season.”

From now through Oct. 8, every time someone “checks in” at any Walgreens store nationwide through Facebook Places or Foursquare, Walgreens will donate one flu shot voucher to the pool of vouchers to be distributed to the participating organizations, up to 200,000.

Additionally, those who visit the Walgreens Facebook page beginning Sept. 11 can cast their vote for which organization they would like to receive the largest number of flu shot vouchers, upon completion of the promotional period.

Walgreens also has provided an additional 20,000 vouchers for $10 flu shots as a base donation to each participating organization for distribution to qualified individuals.

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