克羅格 (KR) 2002 Q2 法說會逐字稿

Good morning.

My name is Judy.

And I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Kroger Second Quarter Earnings Conference Call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer period.

If you would like to ask a question during this time, simply press Star 1 on your telephone keypad.

If you would like to withdraw your question, press the pound key.

Thank you.

Ms. Kelly you may begin your conference.

Thank you.

Good morning.

Before we begin today's call, I want to remind you that the discussion today will include forward-looking statements.

We will caution you that such statements are predictions and actual events or results can differ materially.

A detailed discussion of the many factors that we believe may have a material effect on our business on and on going basis is contained in our SEC filings.

And now I'd like to turn the call over to Joe Pichler.

Thank you, Cathy.

Good morning, and welcome to Kroger's Second Quarter Conference Call.

Thanks for joining us.

With me today are Dave Dillon, Kroger's President and Chief Operating Officer, Rodney McMullen, Executive Vice President, and Mike Schlotman, Group Vice President and Chief Financial Officer.

I'll begin with a brief review of Kroger's second quarter results.

Then I will provide an update on Kroger's strategic growth plan which was announced last December and our new earnings per share guidance.

Rodney will add some additional details about our second quarter financial results and update some of our financial estimates for the year.

We will then be happy to answer your questions.

I'll begin with a discussion of our financial results for the second quarter ended August 17th.

Earnings per diluted share were 35 cents.

These results exclude restructuring charges and related items associated with the implementation of the previously announced strategic growth plan, one-time items, an -- and an extraordinary item.

On this basis, and adjusting prior year results to eliminate goodwill amortization, earnings per diluted share for the second quarter of 2002 were flat compared to the year ago period.

During the quarter, Kroger incurred restructuring costs and related items, one time items and an extraordinary item of $12.1 million after tax.

Including these items, earnings for the second quarter of fiscal 2002 were 33 cents per diluted share compared to 34 cents a year ago, adjusting for the elimination of goodwill.

Later on, Rodney will provide some detail on the one-time items.

Sales for the quarter totals $11.9 billion, an increase of 3.8 percent over the second quarter of fiscal 2001.

Total food store sales rose 4.2 percent.

Identical food store sales including fuel increased .8 percent.

Identical food store sales excluding fuel rose .2 percent.

Comparable food store sales which include relocations and expansions rose 1.7 percent for the quarter.

Comparable food store sales excluding fuel rose .9 percent.

If we include expansions as some of our principal peers do, idents were up 1.0 percent.

We estimate that Kroger's product cost deflation was negative .7 percent in the quarter.

We are pleased by the sequential growth in Kroger's identical food store sales particularly in light of the deflation during the quarter.

Our identical food store sales showed continued improvement toward our goal of 2 to 3 percent growth above product cost inflation by the end of fiscal 2003.