Kroger Co. Earnings: Margins Suffer for Fifth Quarter, but Net Income Climbs

S&P 500 (NYSE:SPY) component Kroger Co. (NYSE:KR) reported net income above Wall Street’s expectations for the first quarter. Kroger is a retail chain operating food and drug stores, multi-department stores, jewelry stores, and convenience stores in the United States.

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Kroger Co. Earnings Cheat Sheet

Results: Net income for Kroger Co. rose to $439.4 billion (78 cents per share) vs. $432 million (70 cents per share) in the same quarter a year earlier. This marks a substantial increase from the year-earlier quarter.

Revenue: Rose 5.8% to $29.06 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Kroger Co. beat the mean analyst estimate of 72 cents per share. Analysts were expecting revenue of $29.13 billion.

Quoting Management: “We were very pleased with the results of the first quarter. We exceeded our expectations, and as a result raised our earnings per share guidance for the year,” Mr. Dillon said. “Through our focus on the customer, we will continue to stand out among food retailers, and drive loyalty, cash flow and earnings growth in 2012 and beyond.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.7 percentage point to 20.5% from the year-earlier quarter. Over that time, margins have contracted on average 1.2 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 7.4% to $21.41 billion in the fourth quarter of the last fiscal year. The figure rose 10.1% in the third quarter of the last fiscal year from the year earlier and climbed 11.3% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now topped analyst estimates for the last three quarters. It beat the mark by one cent in the fourth quarter of the last fiscal year and by 2 cents in the third quarter of the last fiscal year.

The company reported a profit last quarter after being in the red the prior quarter. In the third quarter of the last fiscal year, the company booked a net loss of $196 million, or a loss of 33 cents per share.

Looking Forward: The outlook for the company’s next-quarter results is favorable. The average estimate for the second quarter has reached 50 cents, up from 49 cents seven days ago. The average estimate for the fiscal year is $2.32 per share, down from $2.33 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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