| 06/24/2010 |
ACQUISITION FOR LARGEST GROCER? |
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AP) -- The nation's largest grocer, Kroger Co., is interested in getting bigger -- but not in buying struggling competitors, CEO David B. Dillon said Thursday.
Dillon said the company sees "plenty of growth opportunities" and has been considering acquisitions. But it is steering away from businesses that are marked down because they fell behind as the recession battered industry profits.
"We look at lots of things, but we're not interested in becoming someone's turnaround artist," Dillon said in an interview after the annual shareholders meeting. "We run good stores and are good at running good stores, and we don't want to buy somebody else's problem."
Dillon said Kroger is most likely to add stores in or near its current markets in 31 states. The company owns Ralphs, Dillons, QFC and other chains, along with Kroger; only Wal-Mart Stores Inc. sells more groceries in the U.S.
"We're very highly selective," Dillon said. "Generally the ones we've looked at more often are the ones in our existing markets and adjacent markets."
Being in competition with the world's largest retailer doesn't pressure Kroger to move into new markets, he said.
"Our acquisition and expansion plans are really designed around what we think works for Kroger; it's not a reaction to, say, Wal-Mart being international," he said.
Kroger reported last week that profits fell 14 percent in the first quarter, while sales rose 9 percent. Dillon told shareholders Kroger has been increasing market share and its based of loyal customers and fared better than most competitors during the recession.
Shareholders at the meeting seemed patient, despite a 30 percent drop in Kroger's share price over the last two years.
"It's not been good, but it's a competitive business and I understand that," said Edward Naberhaus of New Braunfels, Texas. "Kroger is still one of the better ones."
"It's been tough for everybody," said another retiree shareholder, Charles Carter of Cincinnati. He's been adding Kroger shares, seeing a buying opportunity.
"Hopefully, I'll be alive long enough to see the prices come back up," he said with a chuckle.
Shareholders elected the company's slate of directors with 93 percent approval.
Kroger expects earnings of $1.60 to $1.80 per share for the year ahead. Analysts on average expect $1.74.
Kroger's board Thursday increased common stock buyback plans to $500 million, more than doubling the $225 million left under its earlier repurchase plan, and it declared a quarterly dividend of 9.5 cents a share.
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