Kroger Company (KR) has reported 8.64 percent fall in profit for the quarter ended Nov. 05, 2016. The company has earned $391 million, or $0.41 a share in the quarter, compared with $428 million, or $0.43 a share for the same period last year.     

Revenue during the quarter grew 5.91 percent to $26,557 million from $25,075 million in the previous year period. Gross margin for the quarter contracted 9 basis points over the previous year period to 22.23 percent. Total expenses were 97.32 percent of quarterly revenues, up from 96.92 percent for the same period last year. That has resulted in a contraction of 39 basis points in operating margin to 2.68 percent.

Operating income for the quarter was $713 million, compared with $772 million in the previous year period.

However, the adjusted operating income for the quarter stood at $6,604 million compared to $6,379 million in the prior year period. At the same time, adjusted operating margin contracted 57 basis points in the quarter to 24.87 percent from 25.44 percent in the last year period.

Comments from chairman and chief executive officer Rodney McMullen "I am proud of our associates for continuing to connect with our customers in a difficult operating environment. Deflation persisted as we expected during the quarter. We are firmly focused on our long-term strategy of improving our connection with customers and associates, and continue working on process changes to lower costs. We don’t change our strategy based on quarterly swings in results. We remain committed to delivering on our long-term earnings per share growth rate guidance."

For financial year 2016, the company forecasts diluted earnings per share to be in the range of $2.03 to $2.08. The company forecasts diluted earnings per share to be in the range of $2.10 to $2.15 on adjusted basis.

The company has spent $3,273 million cash to meet investing activities during the nine month period as against cash outgo of $2,580 million in the last year period. It has incurred net capital expenditure of $2,911 million on net basis during the nine month period, up 16.53 percent or $413 million from year ago period.

The company has spent $86 million cash to carry out financing activities during the nine month period as against cash outgo of $1,259 million in the last year period.

Cash and cash equivalents stood at $362 million as on Nov. 05, 2016, up 32.12 percent or $88 million from $274 million on Nov. 07, 2015.

Working capital remains negative
Working capital of Kroger Company was negative $3,721 million on Nov. 05, 2016 compared with negative $3,675 million on Nov. 07, 2015. Current ratio was at 0.74 as on Nov. 05, 2016, up from 0.72 on Nov. 07, 2015.

Cash conversion cycle (CCC) has decreased to 5 days for the quarter from 6 days for the last year period. Days sales outstanding were almost stable at 4 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 14 days for the quarter compared with 26 days for the previous year period. At the same time, days payable outstanding was almost stable at 24 days for the quarter, when compared with the previous year period.