Kroger saw total sales jump 4.5% to $27.7 billion in Q3, ahead of Wall Street expectations, with net earnings reaching $397 million, or $0.44 per share. Same-store sales grew 1.1% in the quarter, slightly above projections of 0.9% growth.
The largest grocery-only retailer in the U.S. has dealt with increased competition as Walmart, Amazon, Costco and Target all have reduced prices on food and essentials in 2017. On top of that, this was the first quarter during which Kroger has had to maneuver through the Amazon–Whole Foods acquisition.
With the results in hand, the supermarket chain reaffirmed its 2017 adjusted earnings per share forecast of $2.00 to $2.05. The company said it anticipates a one-time, non-cash expense in 2017 of $350 million to $500 million, related to the settlement of obligations for eligible participants’ pension balances.
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The company launched “Restock Kroger” in October to reinvigorate its business, saying it would invest $500 million in store employees, optimize space within stores, cut costs to continue reducing product prices and launch a new apparel brand in 2018. In a statement, Kroger CEO Rodney McMullen indicated that the program is “off to a great start,” and that the company had its best-ever Black Friday results for general merchandise, led by record sales at regional subsidiary Fred Meyer.
“Kroger’s better than expected Q3 results demonstrate that its new initiatives under its restock plan are gaining traction,” said Mickey Chadha, VP of Moody’s in commentary provided to Retail TouchPoints. “Particularly impressive was the 109% increase in digital revenue driven by ClickList, the company’s order online and pick up in-store initiative, and the 30 basis point improvement in year-over-year gross margin for the quarter…despite continuing pricing pressure.”
Kroger Sales Jump 4.5% Even As Pricing Competition Heats Up
