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CINCINNATI , Dec. 11 /PRNewswire-FirstCall/ -- The Kroger Co. (NYSE: KR) today reported total sales increased 9.8% to $16.1 billion for the third quarter that ended November 10, 2007 . Identical supermarket sales increased 7.7% with fuel and 5.7% without fuel. This is the tenth consecutive quarter Kroger has reported identical supermarket sales increases, excluding fuel, in excess of 3%.

Net earnings in the third quarter totaled $253.8 million, or $0.37 per diluted share. These results include a benefit from the resolution of certain tax issues. Most of this benefit was offset by lower margins from retail fuel operations and the Company's decision to accelerate certain initiatives that are part of Kroger's Customer 1st strategy.

Net earnings in the same period last year were $214.7 million, or $0.30 per diluted share.

"Our earnings performance this quarter was solid. Our strategy continues to deliver earnings growth in a variety of economic and competitive conditions, which underscores the core strength of Kroger's business model," said David B. Dillon, Kroger chairman and chief executive officer. "Kroger's strong sales performance in the third quarter is the direct result of our associates' efforts to focus on our customers. Our business model positions us well to serve the diverse needs of our customers."

Highlights of the third quarter included: -- FIFO gross margin decreased 110 basis points to 23.38% of sales (Table 1). Excluding the effect of retail fuel operations (Table 4), FIFO gross margin declined 34 basis points. -- Operating, general and administrative (OG&A) costs as a percentage of sales declined 78 basis points to 17.49%. Excluding the effect of retail fuel operations, OG&A declined 49 basis points (Table 4). -- Capital investment totaled $555.3 million, excluding acquisitions, compared to $415.0 million a year ago. -- Kroger repurchased 16.5 million shares of stock at an average price of $26.77 for a total investment of $442.1 million. At the end of the third quarter, $201.6 million remained under the $1 billion stock repurchase program announced in June 2007. -- On a rolling four-quarters basis, Kroger's net total debt (Table 5) to EBITDA ratio was 1.97, compared with 2.03 during the same period last year.

Fiscal 2007 Year-to-Date Results

During the first three quarters of fiscal 2007, total sales increased 7.6% to $53.0 billion. For the same period, identical supermarket sales, excluding fuel, increased 5.3%.

The Company's operating margin for the first three quarters of fiscal 2007 increased 3 basis points. Excluding fuel and first quarter charges for labor unrest in 2007 and certain legal expenses in 2006, Kroger's operating margin for the first three quarters of fiscal 2007 increased 7 basis points.

Net earnings for the first three quarters of fiscal 2007 were $857.6 million, or $1.22 per diluted share. Net earnings for the same period in fiscal 2006 were $730.1 million, or $1.01 per diluted share.