Bad weather and a reduction in food stamps didn’t seem to have an effect on Kroger during the fourth quarter as the retailer posted a 4.3% increase in identical-store sales, meaningful profit improvement and offered an optimistic outlook for the year ahead.
Total sales increased by 4.8%, when adjusted to exclude an additional week the prior year, to $23.2 billion and full-year sales grew by 3.9% to $98.4 billion. That puts the company in range of surpassing annual sales of $100 billion this year, assuming Kroger maintains its track record of consistent identical sales growth, modest square footage expansion and remodeling activities. The company said it expects 2014 identical-store sales to increase between 2.5% to 3.5% and for food inflation to remain low.
From a profit standpoint, Kroger said net income, adjusted to exclude one-time charges and the additional week the prior year, increased 9.7% to $406 million, or 78 cents a share, from $370 million, or 71 cents a share. Adjusted net income for the year increased to nearly $1.5 billion, or $2.85 a share, from $1.37 billion, or $2.63 a share.
"The remarkable consistency of Kroger's performance has shown time and again that serving our customers is serving our shareholders," said Rodney McMullen. "We are well positioned to continue delivering sustainable high performance that benefits our customers and shareholders today and in the future."
Toward that end, Kroger said it will invest between $2.8 billion and $3 billion this year after spending $2.3 billion last year and $2 billion in 2012. The company ended the year with 2,640 supermarkets and multi-department stores operating under banners that include Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's. The company also operates 786 convenience stores, 320 jewelry stores, 1,240 supermarket fuel centers and 38 food processing plants in the U.S.