Kroger CEO Rodney McMullen is laser-focused on customers and developing meaningful relationships with them. During Thursday’s second-quarter financial results conference call, McMullen said he continues to see positive indicators in customer shopping behavior both through customer feedback and actual shopping behavior.
“Many of our customers are still struggling and we continue to pursue our strategy of connecting meaningfully with all customers wherever they are in the economic spectrum,” McMullen said. “It is worth noting that our definition of a loyal customer is based on a combination of how often a customer shops with us and the amount of products they purchase from Kroger. We have loyal customers in every segment of the customer spectrum, from value customers to upscale shoppers and everywhere in between. We continue to see our loyal households grow at a faster rate than total households.”
Kroger reported a $347 million profit for the second quarter–an increase of 9.5% from the same period a year ago. Financial results were so strong during the quarter ended Aug. 16 that the Cincinnati-based supermarket chain raised its profit and sales outlook for the year.
Second-quarter sales rose 11.6%, to $25.3 billion. Same-store sales excluding fuel, which is a crucial measure of any retailer’s fiscal health, jumped 4.8%. Kroger has now grown this all-important metric for a staggering 43 consecutive quarters.
“As you know, we developed the four keys of our customer first strategy more than 10 years ago,” McMullen explained. “Because we recognize that customers wanted a grocery retailer that would deliver not just one or two key advantages, but a total combination including a great overall shopping experience, excellent customer service, a full assortment of both national and corporate brand products, and everyday low prices and promotional offerings.”
McMullen said that Kroger’s customer research is crucial.
“Our customers don’t want to compromise by choosing retailers who do only well in only one or two areas,” McMullen explained. “In short, customers are looking for a food retailer that can offer it all. And that is Kroger’s sweet spot. That is exactly where we’ve positioned ourselves to win. It is where we are winning. And it is where we intend to continue to win.”
Last year, the grocer reported a $317 million profit on sales of $22.7 billion. The surge in results reflects Kroger’s January acquisition of North Carolina-based Harris Teeter that added more than 200 stores in the Southeast.
Looking ahead, Kroger raised its annual earnings guidance to a range of $3.22 to $3.28 per diluted share from a previous range of $3.19 to $3.27. With 491 million shares outstanding, the company is effectively saying the annual profit will be $5 million to $15 million higher. The latest guidance suggests an annual profit of about $1.6 billion.
The company recently announced it would hire another 20,000 workers–including 1,200 in Greater Cincinnati–for stores nationwide. Kroger employs more than 15,000 workers in the region.