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Kroger 2Q net income up 7.3 pct, sales top $20B
DAN SEWELL
(The Associated Press)




04:47:18PM (DST) 9.9.2011.

CINCINNATI (AP) — Kroger Co. reported Friday that second-quarter profits and sales rose, but the nation's largest grocery store operator says shoppers are feeling bleaker about the economy.

Kroger, like many companies, has been passing along higher prices to consumers to offset its rising costs and higher supplier prices for meat, produce and other items. Kroger has been building customer loyalty by easing rising gas prices with rewards points on their purchases that are good for up to a $1 a gallon off gas, as well as offering loyalty-card holders discounts for the items they buy most often.

Kroger said customers are shopping more often, but buying fewer items per trip and also buying more store brands that are usually priced lower than national brands. With national unemployment of 9.1 percent and a volatile stock market, higher prices make shoppers wary. Kroger said product costs rose 5.2 percent in the quarter — seen most in seafood, meat and produce.

"The sluggish economy continues to strain household budgets while increasing consumer anxiety," Dave Dillon, chairman and CEO, told investors on a conference call. "In fact, customers tell us their expectations for the economy are more pessimistic now than at any time this year."

Kroger reported its net income rose 7.3 percent to $280.8 million, or 46 cents per share. That's up from $261.6 million, or 41 cents a share, a year ago. Revenue rose 11.5 percent to $20.9 billion, helped by gas sales. Kroger, which operates 2,439 grocery stores in 31 states, sells gas in more than 1,000 of its own stations.

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Kroger chain still giving Wal-Mart stiff competition.

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