Kroger Co Earnings Call Insights: Quarterly Guidance Outlook and Sales Analysis

Kroger Co (NYSE:KR) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Quarterly Guidance Outlook

John Heinbockel – Guggenheim Securities: Couple of things. First, did the first quarter come in a little bit better than you guys have planned? In light of sort of the quarterly breakdown, Mike, you’d given on the last call, if that’s true, what may have driven the upside in your mind? Then I know on the last call, Mike, you’d also – you talked about the second and third quarter being up toward the high-end of your long-term range. Are those still about right or has anything changed there?

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J. Michael Schlotman – SVP and CFO: The second and third quarter guidance would remain unchanged and then we didn’t call that out into prepared comments. I focused only on the fourth quarter just to make sure everybody remembered that’s what we said about the fourth quarter. Relative to the first quarter, yes, it came out a little better than we expected. Sales were a little stronger than we had anticipated at the beginning of the year, so I would say it was primarily a sales-driven beat in the first quarter as just well as great execution at store level from a cost control standpoint as well.

John Heinbockel – Guggenheim Securities: And then secondly, as you think about market share, maybe for Dave and Rodney, when you think about market share and we gave the Fort Wayne example, have you yet had a market – and I’m not sure if it would be Cincinnati or Denver or one of those, a market where you’ve not been able to increase share, you’ve had a natural ceiling, and then when you think about the incremental margin attached to that, does that – as you get to certain points of share, whether it be 30 or 35 or whatever, does the incremental margin sort of step up, up to a certain point and then flatten out, or how do you think about the economics of that?

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