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The Kroger Company Third Quarter Earnings Indicate Strong Recovery In Fiscal 2012

|Includes: Kroger Co. (KR), SYY

After falling by 42.6% last year to $1.01, earnings per share this year are on track to be 142% higher. Thanks to 62% growth in earnings this quarter the full year guidance was upped to $2.44-$2.46 from $2.35-$2.42. Unlike Costco (NASDAQ:COST) Kroger (NYSE:KR) didn't need to issue a special dividend for its stock price to rise >5% during Nov 26 through Nov 30 +6.36%. 62% is significant, in fact it's the best quarter for growth in over two years.

Gas prices are up but even without taking into account revenue from its 1141 gas stations, retail sales are up +3.7% quarter on quarter. According to company president Richard McMullen, revenue last quarter originating from supermarkets and department stores was up for the 36th consecutive time. Reasons for the improved bottom line include increased spending per person thanks to relatively stable food prices, and a 74.8% fall in third quarter lifo charge now at $15.5 million.

However, even with revenue growth of 5.3% in the first nine months of this fiscal year, Kroger will fall to second place behind Costco in terms of annual sales; retail sales at Costco were up by 11.5% in 2012.

Latest quarterly retail revenue changes as of Dec 2012, Costco Sept 2, Sysco Sept 29, Kroger Nov 3

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.