Natural foods category helps boost Kroger results

by Eric Schroeder
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CINCINNATI — Solid operating performance, including significant sales growth in natural foods, bakery and deli, led to a 2% gain in earnings at The Kroger Co. Net income in the first quarter ended May 19 was $439.4 million, equal to 78c per share on the common stock, up from $432.3 million, or 71c per share, in the same period a year ago. Net sales increased 6% to $29,064.8 million from $27,460.9 million.

In a June 14 conference call with analysts, Rodney McMullen, president and chief operating officer, said Kroger’s corporate brand share and sales grew more than national brands during the quarter.

“Our corporate brands team continues to create fresh and compelling products that fill unmet customer needs,” Mr. McMullen said. “We recently launched Private Selection snack chips in 13 new flavors, including sea salt, cinnamon and sugar, and a new gluten-free rice and bean chip made from rice and adzuki beans.”

The growth in the company’s natural foods business was touched on by both Mr. McMullen and Dave Dillon, chairman and chief executive officer. Mr. Dillon described a “trend change” where people are eating more organic and natural foods.

“As we do a better and better job in that area, we’re able to, for our customer, eliminate one extra shop and they can get those items from us at a price point that’s very reasonable,” Mr. Dillon said.

Mr. McMullen added that Kroger continues to get better at “target marketing personalization” for its customers.

“The biggest growth in natural foods is really regular customers that aren’t just diehard natural foods or organic shoppers are finding some of the products taste better,” Mr. McMullen said. “Some of the items they just like the item. It’s more creative. So you’ll see customers that aren’t necessarily just natural foods shoppers but shoppers that find something they like and they will buy in that category.”

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