Kroger reports strong third quarter

Market share leader in Milwaukee said same-store sales increased 1.1% after a year of reinvestment

Making good on a promise to not surrender sales to competitors — digital or otherwise — The Kroger Co. on Thursday reported fiscal third-quarter earnings of $397 million, exceeding Wall Street expectations.

Kroger said sales at stores open at least a year, a crucial measure of a retailer’s performance known as same-store sales, were up 1.1% in the quarter.

The Cincinnati-based company said it had profit of 44 cents per share.

The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of 40 cents per share.

Kroger is the world’s third-largest retailer by sales behind Walmart and Costco. When measured by U.S. sales, Kroger is second only to Walmart.

When Amazon said in June that it was buying Whole Foods, Kroger was widely seen as being vulnerable to competition from the online retailer.

Kroger responded by lowering prices and investing in its stores, spending $50 million, for example, to upgrade its Milwaukee area stores in 2017.

Rodney McMullen, Kroger chairman and CEO, has said repeatedly that the company had no intention to wilt in the face of tough competition.

He reiterated that last week in an interview with the Milwaukee Journal Sentinel.

“We will not give up business to anybody,” McMullen said. “We’re looking to

grow our business and always have been.”

He added that the company is continuing to reinvent itself and that he expects competition in the grocery business to intensify in 2018.

“Customers are recognizing our efforts to redefine the customer experience and rewarding us with their loyalty,” McMullen said in a statement announcing earnings Thursday. “We continue to accelerate our digital and ecommerce offerings ... to lower prices for customers, and to invest in our associates.

“This quarter shows that by investing for the future, our business continues to improve and gain momentum,” McMullen said in the statement. “We remain confident in our ability to continue to grow identical supermarket store sales and market share for the balance of the year and in 2018.”

Kroger purchased Milwaukeebased Roundy’s in 2015 and operates it as a subsidiary. The company operates Pick ’n Save, Metro Market and Copps stores in Wisconsin and the Mariano’s stores in the Chicagoland metro area.

Kroger is the market share leader in the Milwaukee area grocery market.

In Wisconsin, Kroger employs more than 13,000 people. Of those, about 7,500 work at 60 stores in metro Milwaukee and at the former Roundy’s headquarters in downtown Milwaukee.

Kroger employs 443,000 people who serve about 8.5 million customers each day across 35 states. The company operates nearly 3,000 retail food stores.

The supermarket chain posted revenue of $27.75 billion in the third quarter, also topping forecasts. Four analysts surveyed by Zacks expected $27.31 billion.

Kroger expects full-year earnings in the range of $2 to $2.05 per share.

Kroger shares have dropped 29% since the beginning of the year, while the Standard & Poor’s 500 index has increased 17%. The stock has decreased 26% in the last 12 months.

However, Thursday’s earnings report prompted the grocer’s stock to rise by more than 6%, or $1.48 per share, on Thursday.