CINCINNATI — After a difficult fourth quarter in which net earnings plunged 70% from the same period a year ago, executives at Kroger Co. acknowledged in March that they had work to do. Challenges persisted in the first quarter of fiscal 2019, though.
Net earnings attributable to Kroger in the first quarter ended May 25 totaled $772 million, equal to 96c per share on the common stock, down 62% from $2,026 million, or $2.39 per share, in the same period a year ago.
Sales totaled $37,251 million, basically unchanged from $37,722 million a year ago.
Despite the disappointing quarterly results, William R. McMullen, chairman and chief executive officer, said the company has been energized by the challenge of reinvigorating the business.
“There are several examples in the first-quarter results that reflect the discipline, focus and progress we are making on our transformation plan: Restock Kroger,” Mr. McMullen said during a June 20 conference call with analysts. “All of this work starts with our customer-obsession focus. That is why we’re building an omnichannel platform to serve customers with Anything, Anytime, Anywhere. That is why we’re focused on redefining the experience grocery customers can expect to have in our stores and online, improved upon by existing, exciting partnerships that create additional value. That said, while the second year of Restock Kroger is off to a solid start, we know we can do better when it comes to our identical sales results. To that end, it’s important that I say right up front that by further intensifying our customer focus, Kroger’s quarter-to-date identical sales are trending better than the first quarter and moving toward the guidance range.”
Mr. McMullen said one of Kroger’s most powerful competitive advantages is also one of its best performers: private label. He said the company’s store brand products grew 3.3% and unit share gained 66 basis points to reach 28.9% share in the first quarter.
“The focus on shifting the mix to Simple Truth and premium brands, such as Private Selection, led to double-digit gains in the quarter in those brands,” he said. “We know that our customers love our brands and that they are hungry for innovative new products that they can only get by coming to and shopping with Kroger.”
Mr. McMullen said Kroger introduced 219 store brand products in the first quarter, including new items that match up with food and flavor trends that the retailer predicted last year. New items, including Private Selection pork belly bites, Private Selection artisan jerky and Kroger Deluxe Unicorn Swirl Ice Cream, contributed more than $225 million in incremental sales during the first quarter, he said.