Kroger's Q1 Sales Boosted by Its Gas Stations

CINCINNATI -- Kroger reported double-digit jumps in its first-quarter revenue and net income, which the grocery chain credited to drawing more frequent shoppers with loyalty rewards, and higher gas and grocery prices.

The nation's largest traditional grocer also raised its full-year earnings guidance Thursday after the strong results, according to the Associated Press.

Kroger said its net income rose to $432.3 million, up nearly 16 percent from a year ago. Revenue jumped 11 percent to $27.5 billion.

In addition to operating 2,449 grocery stores in 31 states, the retailer also has 799 company-owned convenience stores operating under such banners as City Market, Kroger Express, Kwik Shop, Tom Thumb, Turkey Hill Minit Market and other names. In total, the company operates more than 1,000 gas stations at its grocery and convenience stores.

Without gas sales -- and U.S. gas prices were about $1 more per gallon over the previous period – Kroger said its revenue would have been up only 5 percent in the quarter.

Revenue at supermarkets open at least five quarters rose 4.6 percent, excluding fuel sales.

Besides its gas stations boosting sales, Kroger also credited attracting more new and frequent shoppers, and company cost reductions and improved productivity. Shoppers using Kroger loyalty cards can earn rewards of up to $1 off a gallon at store gas stations, and Kroger has also expanded a tie-in with Shell Oil that allows customers to get 10 cents off on Shell gas.

Kroger has seen modest inflation in grocery prices that it passed along; higher prices also have helped its store-brand products that are usually priced below national brands.