Kroger announced preliminary results for the fourth quarter ended January 29, 2005.
Total sales for the fourth quarter of 2004 increased 5.1% to $13.7 billion. This growth resulted from strong sales at the Company’s food stores, including fuel, as well as from the convenience and jewelry stores. Net square footage at the Company’s food stores increased 1.2%.
“We are very pleased with our sales performance in the fourth quarter. Kroger’s identical food-store sales, without the effect of fuel and southern California, have shown sequential improvement for seven of the past eight quarters. This is a clear sign that Kroger’s strategic focus on fulfilling the needs of our customers continues to generate positive results,” said David B. Dillon, Kroger chairman and chief executive officer. “This momentum has continued in fiscal 2005, with identical food-store sales through the first five weeks running ahead of our fourth-quarter results.”
Mr. Dillon said the successful execution of Kroger’s strategy produced strong cash flow, enabling the Company to continue its “financial triple play” of reducing total debt by nearly $400 million, repurchasing $318.7 million in stock, and investing $1.6 billion in capital projects.
Kroger reported a net loss of $675.9 million, or $0.93 per share, for the fourth quarter. These results include a goodwill impairment charge of $884.0 million after tax, or $1.21 per share, related to the Ralphs and Food 4 Less operations.
In the year-ago period, Kroger reported a net loss of $337.4 million, or $0.45 per share. These results included several items that collectively reduced net earnings by $663.1 million, or $0.89 per share. Additional detail is provided in Tables 2 and 3.
During the fourth quarter of 2004, Kroger repurchased approximately 4.2 million shares of stock at an average price of $16.52 for a total investment of $69.2 million. There is approximately $353 million remaining under the new $500 million stock buyback announced in September. Since January 2000, Kroger has invested $2.7 billion to repurchase 140.8 million shares. The Company continues to buy back stock.
For the full 2004 fiscal year, sales increased 4.9% to $56.4 billion. Kroger reported a net loss of $128.0 million, or $0.17 per share. These results include several items that collectively reduced net earnings by $981.0 million, or $1.33 per share (Tables 2 & 3). For the full 2003 fiscal year, net earnings were $314.6 million, or $0.42 per diluted share. These results included items that reduced net earnings by $801.3 million, or $1.06 per diluted share (Tables 2 & 3).
“Kroger’s growth strategy is squarely focused on consistently meeting the needs of our customers through our associates providing improved service, selection and value. We have made considerable progress, and in 2005, the successful execution of our strategy will be clearly evident in our financial performance,” said Mr. Dillon.
Kroger expects 2005 net earnings to increase compared to 2004, excluding the effect of the goodwill impairment charge. Kroger expects this earnings growth to be fueled by improved results in southern California, growth in the balance of the Company, and lower interest expense. As a result, Kroger expects net earnings in 2005 to exceed $1.16 per diluted share.
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