Tough times for consumers are good times for Ralphs' parent

Ralphs shoppers may lament the grocery chain’s new cutback on double-couponing, but the company’s parent today showed why the need for that particular promotional hook has lessened: Struggling consumers are coming through the doors for other reasons, including for cheaper store-brand goods -- and because they can't afford to eat out.

Kroger Co., which owns Ralphs, Kroger, Food 4 Less, Smith’s and other chains nationwide, reported quarterly earnings that beat expectations, sending its shares up 7% for the day.

Cincinnati-based Kroger told analysts during a conference call that it’s benefiting as more cash-strapped consumers turn to its less-expensive store-brand items in place of brand-name products.

What’s more, people apparently aren’t kidding when they say in consumer surveys that they’ve stopped going to restaurants.

Here’s what Kroger’s CEO, David Dillon, said on the call: "When we dissect some of our data and we look at our very best customers, [they] are buying both more Kroger brand and more national brand, not just more Kroger brand. And we believe that the way to read that is that there’s of course a shift from restaurants and other places to buying more food in our stores. We think there’s a shift to preparing food at home more."

That trend helped drive Kroger’s earnings to $386 million, or 58 cents a share, in the quarter ended May 24, up 15% from a year earlier. Sales jumped 11% to $23.1 billion. Analysts had expected profit of 55 cents a share.

The company said it expected full-year profit to be up as much as 12% from 2007. And in an economy where many companies will be hard-pressed to show much or any profit growth this year, Kroger’s double-digit promise rang Wall Street’s bell: The stock jumped $1.82, or 7%, to $27.82. It’s now up 4.2% this year, compared with a drop of 10.5% for the Standard & Poor’s 500 stock index.

Comments

[Alan]

This economic mess is in no way Greenspan's fault.

Repeat this daily.

Alan

[A.L. Hern]

A few years ago, Ralphs dropped double coupons altogether; they were forced to bring them back due to complaints and lost busines.

Recently, they've remodeled their stores, resulting in less variety on the shelves as floor space is surrendered to high mark-up "services" such as salad and Asian hot-food bars (at exhorbitant prices; by comparison, the Panda Express counters at various Vons and Pavilions stores are a considerable bargain, and the food is better, too).

At the Ralphs at Sunset Blvd. and Ponsettia Ave. the drnking fountain was removed for the remodeling, and never replaced, despite numerous complaints. The store manager's explanation? If they put in a new fountain, "derelicts" will come in off the street and congregate there (funny how that doesn't happen at the drnking fountain at the Ralphs at Fountain and LaBrea, three blocks away). Obviously, they want people who buy the overpriced, dry and flavorless fare from the hot-food bars to buy drinks, too.

Now this.

It's obvious that Ralphs has nothing but contempt for their customers, as they never miss an opportunity to betray them at every turn.

[A Rothman]

No doubling of any coupon above 50 cents means I will switch to Vons to shop until they decide to change their policy also. Bummer, Vons is really inconvenient to get to from my neighborhood since they closed the closer Vons due to lack of business.

I hope Ralphs sales drop and they bring back the doubling.