NEW YORK (AP) — The Kroger Co. said Thursday that costs associated with consolidating its pension plan for union workers led it to post a net loss in the fourth quarter, even as sales improved at the nation's biggest supermarket chain.
The Cincinnati-based operator of Kroger, Ralphs, Food 4 Less and other grocery stores said it lost $306.9 million, or 54 cents per share, for the three months ended Jan. 28. That's compared with a profit of $278.8 million, or 44 cents per share, a year ago.
Not including one-time charges, the company said it earned 50 cents per share. By that measure, analysts on average expected a profit of 49 cents per share.
The per-share results in the latest quarter were also boosted by the company's stock buybacks during the period, which totaled $272.4 million for 11.7 million shares.
Kroger also raised its full-year net earnings forecast to $2.28 to $2.38 per share, due to the benefit of an extra week in the year, lower-than-expected accounting charges and aggressive stock buybacks during 2011. It had previously forecast earnings of $1.95 to $2 per share.
Shares of Kroger gained 71 cents, or 3 percent, to $23.79 in pre-market trading.
For the quarter, Kroger said total sales increased 7.7 percent to $21.4 billion from a year ago. When excluding results from its 1,090 fuel stations, sales increased 5 percent over the same period last year. Kroger provides the latter sales figure because fuel profits are volatile and don't reflect the company's core business.
Revenue at stores open at least a year rose 4.9 percent when excluding gas sales. The metric is a key performance measure because it strips out the effect of newly opened or closed stores.
Up until now, Kroger has maintained its profitability in the down economy by focusing on low prices and loyalty programs that offer shoppers discounts on their favorite items.
The strategy of attracting customers with great deals has been challenging in recent years for supermarkets and big-box retailers, which are paying more to keep shelves stocked as a result of rising fuel commodity prices. Kroger says it has managed the balancing act in part by controlling its operating and administrative costs. The company has also focused on pushing its house brands to offset expenses.
CEO David Dillon said the strategy has paid off with increased market share in the quarter.
The pension-related costs had been announced in December, when the company said that four of the union pension funds to which it contributes were merging into a new fund as of the start of this year. Kroger contributed $650 million to the new fund in January as part of the agreement.
Over the long term, the company said the move is expected to reduce the annual pension contributions it makes to more than 65,000 employees.