Kroger’s Profit Up 30% as Southland Sales Rise

Ralphs parent Kroger Co. said Tuesday that fiscal third-quarter profit rose 30% as results continued to improve at stores in Southern California.

Kroger, the largest U.S. grocer, maintained its outlook for the year but said earnings should be reduced by 4 cents to 6 cents a share in 2006 as it started to expense stock options.

The Cincinnati-based company and rivals Safeway Inc. and Albertsons Inc. were hit hard by a 4 1/2 -month strike and lockout in Southern and Central California that ended in February 2004.

Sales at Kroger’s Ralphs and Food 4 Less stores in Southern California improved in the latest quarter. But the pace of recovery in the area is slower than the company would like, Chief Executive David Dillon said in a statement.

“Clearly there are opportunities for growth,” he said, “and our teams are focused on seizing those.”

Kroger shares fell 71 cents to $19.52.

Albertsons and smaller grocers have recently put themselves up for sale as the industry continues to face tough price competition from Wal-Mart Stores Inc., the largest U.S. seller of food.

Kroger declined to speculate about any acquisition plans.

For its fiscal quarter ended Nov. 5, Kroger’s profit rose to $185.4 million, or 25 cents a share. That compares with $142.7 million, or 19 cents, a year earlier.

The per-share results matched analysts’ expectations, according to Reuters Estimates.

Revenue rose 9.1% to $14.02 billion, topping analysts’ average forecast of $13.6 billion.

In Southern California, same-store sales excluding fuel gained 2.9%.