Skip to main content

Kroger posts strong earnings growth but outlook disappoints

Kroger Co.’s earnings and revenue rose in the fourth quarter, but it issued a conservative profit outlook for 2018 as competition in the supermarket sector continues to intensify.

Kroger’s net income for the fourth quarter totaled $854 million, or 96 cents a share, compared with $506 million, or 53 cents a share, a year earlier. Excluding one-time items, Kroger earned 63 cents a share, matching analysts' estimates and up from 53 cents a share in the year-ago period.

Revenue increased 12.4% to $31 billion, slightly ahead of forecast for $30.8 billion.

For the full year, Kroger reported net earnings of $1.9 billion, or $2.09 per diluted share. Adjusted net earnings totaled $1.9 billion, or $2.04 per diluted share.

Total sales increased 6.4% to $122.7 billion in 2017.Excluding fuel, the 53rd week and the Modern Health merger, total sales increased 2.2% in 2017 compared to 2016. Kroger's gross profit margin fell 0.2% in 2017.

“We launched Restock Kroger [Kroger’s term for its updated strategy] in the fall of 2017 and finished the year with positive momentum in our sales and overall business,” stated chairman and CEO Rodney McMullen. “Customers are letting us know that they see, feel and appreciate our efforts to redefine the customer experience – and they are rewarding us with growing loyalty. This is the cycle that creates long-term value for shareholders.”

Kroger launched its Restock plan in October, amid growing pressure from Amazon, Walmart, Aldi and others. It includes an accelerated commitment to digital and e-commerce efforts, a front-end transformation and an increased emphasis on it private-label brands.

For fiscal 2018, Kroger said it expects earnings of $1.95 to $2.15 per share, below the $2.15 analysts were expecting.

“As we embark on our first full year of Restock Kroger, we are encouraged at the start of 2018 and confident in our ability to deliver on both our plan for the year and our long-term vision to serve America through food inspiration and uplift,” McMullin said.
This ad will auto-close in 10 seconds