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Document Preview Merrill Lynch Retail Leaders Conference |
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Title: |
Merrill Lynch Retail Leaders Conference |
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Date: |
2003 |
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$38 |
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#253211 |
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MERRILL LYNCH RETAIL LEADERS CONFERENCE
March 19, 2003
comments by Joseph Pichler:
Good morning and thank you for joining us. I am Joe Pichler, Chairman and Chief
Executive Officer of The Kroger Company. With me today are: Mike Schlotman,
Group Vice President and Chief Financial Officer; and Kathy Kelly, Director of
Investor Relations.
Before we begin, I want to remind everyone that the discussion today will
include forward-looking statements. I want to 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 an ongoing basis, is contained in our SEC filings.
I will begin with a few highlights of Kroger's fourth-quarter, full-year
results, as well as earnings guidance for 2003. Later I will provide a progress
report on our Strategic Growth Plan, and then outline five key strengths that
set Kroger apart from our competitors. Mike will present more detail about our
fourth-quarter financial results and provide some guidance for 2003. We will
then be happy to answer your questions.
For the fourth quarter ended February 1/st/, Kroger reported earnings of $0.49
per diluted share, before one-time items. These results were equal to the
year-ago quarter, on the same basis, and were consistent with our previous
guidance.
Adjusted EBITDA totaled $974.4 million, a decrease of 4.5% from a year ago.
page 1
{PAGE}
Total sales for the fourth quarter of fiscal 2002 increased 2.8% to $12.5
billion. Total food-store sales rose 2.4%. Identical food-store sales, including
fuel, declined 1.0%. Identical food-store sales, excluding fuel, decreased 1.8%.
Comparable food-store sales, which include relocations and expansions, decreased
0.3% for the quarter. Comparable food-store sales, excluding fuel, declined
1.2%. Kroger estimates that our product cost deflation, including fuel, was
flat. Deflation, excluding fuel, was negative 0.5% in the quarter.
While we were not satisfied with our sales, we recognize that it was a difficult
holiday season for Kroger and most retailers. Consumers were still concerned
about the weak economy, high unemployment and the possibility of war. They
remained cautious in their purchasing patterns during the fourth quarter.
Through the first six weeks of fiscal 2003, our identical food store sales are
trending higher than our results for the fourth quarter of 2002. Kroger has
benefited from both the weather and our Strategic Growth Plan during those
weeks.
For fiscal 2002, sales increased 3.3% to $51.8 billion. Earnings from operations
were $1.65 per diluted share, compared to $1.59 per diluted share in 2001.
Earnings from operations for 2002 totaled $1.3 billion, equal to 2001. Results
for both years exclude one-time items. Adjusted EBITDA for the year totaled
$3.749 billion, as compared to $3.742 billion in 2001. Net earnings for 2002
were $1.52 per diluted share as compared to $1.37 in 2001. The 2001 earnings
figure has been adjusted for the elimination of goodwill amortization as
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