And those results won't stop with this quarter, he said during a conference call Tuesday. "Based on year-to-date financial results and current trends, Kroger now expects identical supermarket sales growth of approximately 5% for the full year, excluding fuel sales," Dillon said. "Looking beyond 2007, we expect identical supermarket growth in the 3% to 5% range, with a slightly improving operating margin, excluding the effect of retail fuel operations." The company has 2,487 stores in 31 states under names such as Kroger, Ralphs, Fred Meyer and Dillons, including 678 fuel centers.
With A&P selling its Farmer Jack chain and moving its operations to mostly the Northeast region, Kroger is enjoying a void in the marketplace in many areas, especially the Midwest. However, with Tesco promising to bring in 1,000 stores to the US, Dillon said during the call that Kroger will have to become more flexible to change. "One thing that is clear is that we take Tesco and other competitors very seriously, and that we will improve as a result of this new competition," he said during the call.
Kroger is engaged in a steady remodeling process, completing 155 store reconfigurations by the end of the third quarter, and more than 112 remodels last year. The company spent about $555.3 million on capital projects in Q3 2007 alone, with 54 remodels and 13 new stores, though the firm also closed seven locations. W. Rodney McMullen, vice chairman of the company, said during the call that the company expects to spend up to $2.1 billion total on capital projects for 2007.
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