The Kroger Co. (KR) has reported a 9.48 percent fall in profit for the quarter ended Jan. 28, 2017. The company has earned $506 million, or $0.53 a share in the quarter, compared with $559 million, or $0.57 a share for the same period last year.
Revenue during the quarter grew 5.53 percent to $27,611 million from $26,165 million in the previous year period. Gross margin for the quarter contracted 63 basis points over the previous year period to 22.19 percent. Total expenses were 96.89 percent of quarterly revenues, up from 96.45 percent for the same period last year. That has resulted in a contraction of 44 basis points in operating margin to 3.11 percent.
Operating income for the quarter was $858 million, compared with $928 million in the previous year period.
Comments from Chairman and CEO Rodney McMullen "True to our history, we will continue making proactive investments in our Customer 1st Strategy to maintain our strong competitive position. We are lowering costs to invest those savings in our people, our business, and technology. This approach will enable us to deliver on our long-term net earnings per diluted share growth rate target of 8 ��" 11%, plus an increasing dividend, as it has in the past. "In 2016, Kroger grew market share, increased tonnage, and hired more than 12,000 new store associates. For 2017 and beyond, we will continue delivering for our customers while also setting the company up for our next phase of growth and customer-first innovation."
For fiscal year 2017, the company expects diluted earnings per share to be in the range of $2.21 to $2.25.
Operating cash flow declines
The Kroger Co. has generated cash of $4,272 million from operating activities during the year, down 13.12 percent or $645 million, when compared with the last year.
The company has spent $3,875 million cash to meet investing activities during the year as against cash outgo of $3,570 million in the last year. It has incurred net capital expenditure of $3,567 million on net basis during the year, up 7.96 percent or $263 million from year ago.
The company has spent $352 million cash to carry out financing activities during the year as against cash outgo of $1,338 million in the last year period.
Cash and cash equivalents stood at $310 million as on Jan. 28, 2017, up 11.91 percent or $33 million from $277 million on Jan. 30, 2016.
Working capital remains negative
Working capital of The Kroger Co. was negative $2,520 million on Jan. 28, 2017 compared with negative $3,079 million on Jan. 30, 2016. Current ratio was at 0.80 as on Jan. 28, 2017, up from 0.76 on Jan. 30, 2016.
Cash conversion cycle (CCC) was almost stable at 4 days for the quarter, when compared with the last year period. Days sales outstanding were almost stable at 3 days for the quarter, when compared with the last year period.
Days inventory outstanding was almost stable at 13 days for the quarter, when compared with the last year period. At the same time, days payable outstanding was almost stable at 11 days for the quarter, when compared with the previous year period.
Debt moves up
The Kroger Co. has witnessed an increase in total debt over the last one year. It stood at $14,077 million as on Jan. 28, 2017, up 16.54 percent or $1,998 million from $12,079 million on Jan. 30, 2016. Total debt was 38.56 percent of total assets as on Jan. 28, 2017, compared with 35.63 percent on Jan. 30, 2016. Debt to equity ratio was at 2.10 as on Jan. 28, 2017, up from 1.78 as on Jan. 30, 2016. Interest coverage ratio deteriorated to 6.81 for the quarter from 8.21 for the same period last year.
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