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Kroger: Customer First strategy contributes to 34 consecutive quarters of positive IDs

BY Michael Johnsen

CINCINNATI — Kroger on Thursday posted its 34th consecutive quarter of positive identical-supermarket sales, vetting the company’s approach to competing in the food industry not as a traditional food retailer, but as a retailer that happens to sell its customers a lot of food.

"Identical-store sales are the most visible indicator of a retailer’s relevancy to its customers," David Dillon, Kroger chairman and CEO, told analysts Thursday morning. "Customers [are] coming from a much broader base than just food retailers," he said. When Kroger analyzes its top competitors market by market, the top two or three competitors are not grocers, Dillon said.

"Despite a difficult competitive and consumer environment for conventional grocers, Kroger continues to perform well, as [its] Customer First strategy continues to resonate," noted Deutsche Bank research analyst Charles Grom in a research note published Wednesday. Kroger’s 34th consecutive quarter of same-store sales growth reflects Kroger’s key advantages, Grom added, including lower prices, a loyalty card program that uses learnings from consumer research firm dunnhumbyUSA, an extensive store-brand portfolio and a strong financial management structure.

"By focusing on customers, we’re defining the business that we’re in by how the customers think about it," Dillon said, and it’s that perspective that’s helping to drive sustainable growth through a tough economy. "It’s almost a classic business school case study that shows how you define your market and how you think of yourselves will define who you become."

For example, one of the businesses Kroger has emphasized is its retail pharmacy, which has been realizing identical-sales growth in the double-digits. Mike Schlotman, CFO and SVP of Kroger, credited half of that sales growth to captured Express Script prescriptions from Walgreens, and the other half to improved pharmacy performance. "Even without Express Scripts, pharmacy had a very strong identical-sales growth," Dillon said.

Pharmacy same-store sales will decrease going forward due to the large generic wave going through 2012, but that won’t impact overall same-store sales, Schlotman noted. Kroger continues to expect identical-supermarket sales growth, excluding fuel, of 3% to 3.5%. In accordance with Kroger’s original guidance, this includes the expected negative effect on sales from prescription drugs coming off patent.

Kroger sales were up 5.8% to $29.1 billion for the first quarter ended May 19, the grocer reported Thursday. Total sales, excluding fuel, increased 4.3% over the same period last year. Identical-supermarket sales, without fuel, increased 4.2% in the first quarter over the same period last year.

Based on the strong results in the first quarter, the company increased its earnings per share guidance to $2.33 to $2.40 per diluted share for fiscal 2012. The original guidance was $2.28 to $2.38 per diluted share. “Kroger’s solid first-quarter performance demonstrates that our Customer First strategy continues to resonate with customers,” Dillon said.

Separately, the company today announced that the board authorized a new $1 billion share repurchase program that replaces the prior authorization, which was exhausted on June 12.

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Crown Dynamics introduces patented device to help decrease snoring

BY Michael Johnsen

SCOTTSDALE, Ariz. — Crown Dynamics on Wednesday launched its patented Air Sleep/Snore product line. The products are infused with a proprietary blend of therapeutic essential oils shown to promote sleep while gently dilating nasal passages to help increase oxygen flow and decrease snoring.

"After years of research and development, we’re excited that we can deliver to consumers a product that is unlike anything else found in the market today," stated David Dolezal, president of Airware Labs. "We’re proud to offer our unique AIR Sleep/Snore product, which combines essential oils with our AIR Breathe product that has been clinically proven to significantly reduce snoring."

The active ingredient is lavender — University of Maryland researchers have confirmed that lavender produces slight calming, soothing and sedative effects when it is scent is inhaled.

Crown Dynamics’ Airware Labs recently published a clinical trial designed to determine the efficacy of its AIR Breathe products for users and sleep quality for their partners. The product, which acts as an internal nasal dilator as opposed to adhesive nasal strips placed on the outside of the nose, demonstrated substantial alleviation of snoring in AIR Breathe users, resulting in sounder, more restful sleep for users, as well as 88% of their bed partners.

The clinical research findings were published in the September-October issue of Sleep Diagnosis and Therapy.

 


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Cellceutix gets FDA nod to accelerate development of psoriasis treatment

BY Michael Johnsen

BEVERLY, Mass. — Cellceutix on Wednesday reported that the Food and Drug Administration granted a section 505(b) designation for its Prurisol treatment for psoriasis, which would allow the company to forgo early-stage trials and advance Prurisol into latter-stage clinical trials.

"It was a very productive meeting with the FDA, providing us with valuable advice about advancing Prurisol down the regulatory pathway," stated Cellceutix CEO Leo Ehrlich. "Now we will begin the preparatory work necessary for a phase-2 clinical trial application for Prurisol based upon the FDA guidance," he said.

"The recent activity of Steifel Labs, a GlaxoSmithKline company, spending approximately $350 million to acquire rights to skin treatment drugs still in development from Welichem Biotech and Basilea Pharmaceutica demonstrates how valuable and in high demand new dermatological drugs are right now," Ehrlich added. "This is a very exciting time for Cellceutix and its shareholders as we transition from pre-clinical to clinical with drugs that have incredible potential."

Cellceutix previously has disclosed images of mice treated with Prurisol demonstrating its effectiveness as compared with methotrexate, a standard care treatment for psoriasis today.

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