AP News

Earnings Preview: Kroger banks on loyalty


NEW YORK (AP) — The Kroger Co. reports its second-quarter results Friday, which should give investors a glimpse of how the supermarket chain's customer loyalty program is impacting sales.

WHAT TO WATCH FOR: The Cincinnati-based company is betting that its loyalty program, which offers shoppers discounts based on past purchases, will help it hold onto customers amid intensifying competition.

Kroger, which operates Ralphs, Food 4 Less and Fred Meyer, said it added "loyal households" in the first quarter as a result of the program. The company defines loyal households based on shopping patterns.

THE BIG PICTURE: Kroger is the nation's largest traditional supermarket chain, and its results can serve as a bellwether for the industry. Grocery store operators have been struggling to hold onto shoppers at a time when big-box retailers such as Target Corp. and Wal-Mart Stores Inc. are expanding their food offerings. Shoppers are also getting food from places such as dollar stores and drugstores.

Traditional supermarkets now account for 51 percent of grocery sales, down from 66 percent in 2000, according to UBS Investment Research.

LAST YEAR'S QUARTER: The company earned $280.8 million, or 46 cents per share, on revenue of $20.9 billion.

WHAT'S EXPECTED: Analysts on average expect a profit of 49 cents per share on revenue of $21.57 billion.


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