Kroger Co. said fourth-quarter earnings rose 8.7% after the largest U.S. grocery chain and owner of Ralphs reduced costs.
Net income in the quarter ended Feb. 1 rose to $381 million, or 50 cents a share, from $350.4 million, or 43 cents, in the year-ago quarter when the company had $31.7 million in restructuring expenses. Sales rose 2.8% to $12.5 billion, Kroger said.
Profit for 2003, excluding certain expenses, will be in line with Kroger's December forecast of $1.65 a share, the company said. Chief Executive Joseph Pichler has lowered prices and spent more on promotions to maintain sales as Wal-Mart Stores Inc. expanded its food business. Some investors had been concerned that Kroger would cut forecasts in light of slowing consumer spending.
"This is a company with major staying power and a nice business," said Bob Buettner of Strong Capital Management, whose $40 billion in assets include 1.6 million Kroger shares. "Kroger has been absolutely pounded by Wal-Mart for a couple of years and has learned to coexist."
Shares of Kroger, based in Cincinnati, rose 53 cents, or 4.4%, to $12.66 in New York Stock Exchange trading.
Kroger, with 2,488 stores in 32 states, said it may exceed its goal of cutting $500 million in costs by next February by centralizing purchases, reducing stolen and spoiled goods and finding ways to make its workforce more efficient.