Kroger beats estimates with lower profits in Q1
The Kroger Company’s net earnings declined year-over-year in the first quarter of fiscal 2024, but still came out ahead of analyst predictions.
The grocery conglomerate reported net earnings of $1.01 billion in the quarter ended May 25, 2024, down 2.7% from $1.05 billion the same quarter a year earlier. Earnings per share were $1.43, down from $1.51. However, Wall Street analysts had projected that earnings per share for the quarter would only total $1.35.
Total company sales for the quarter were $45.3 billion, up slightly year-over-year from $45.2 billion. Excluding fuel, sales increased 0.6% compared to the same period the prior year, and identical sales without fuel rose 0.5%.
On the digital side of its business, Kroger reported highlights including:
- Year-over-year delivery sales increase of 17%, led by automated Customer Fulfillment Centers.
- Year-over-year increase in digitally engaged households of 9%.
- Achieved a new record for quarterly pickup fill rate.
Kroger reaffirmed its guidance for the full 2024 fiscal year, including:
- Identical sales increase without fuel of 0.25% – 1.75%.
- Adjusted net earnings per diluted share of $4.30 – $4.50.
- Capital expenditures of $3.4 – $3.6 billion.
"Kroger is off to a solid start in 2024 led by better-than-expected performance of our grocery business,” said Kroger chairman and CEO Rodney McMullen. “Kroger is delivering exceptional value at a time when many customers need it more than ever, by providing affordable prices with personalized promotions. We appreciate our associates who are elevating the customer experience and improving store execution. Together, this is growing households and increasing customer visits.
“The long-term investments we have made to strengthen and diversify our model enables us to manage economic cycles and gives us the confidence to deliver on our full year outlook. By delivering value for customers and investing in our associates, Kroger remains well-positioned to generate attractive and sustainable returns for our shareholders."
"The long-term investments we have made to strengthen and diversify our model enables us to manage economic cycles and gives us the confidence to deliver on our full year outlook," said McMullen. "By delivering value for customers and investing in our associates, Kroger remains well-positioned to generate attractive and sustainable returns for our shareholders."
Kroger-Albertsons merger update
The Kroger Co. and Albertsons Cos. are expanding the number of stores they plan to sell in a bid to gain regulatory approval for their long-delayed $25 billion merger.
The two grocers recently added 166 more stores to the list of 413 locations to be sold to C&S Wholesale Grocers. The addition means that 579 stores will be sold to — and continue operating as they do now — by the new owner, C&S. Under the new agreement, C&S will pay Kroger about $2.9 billion in cash for the stores, up from the previous $1.9 billion under the original plan.
Also, under the updated plan, C&S will license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and in Colorado. In these states, Kroger will re-banner the retained Albertsons and Safeway bannered stores following the closing of the merger. Kroger will maintain the Albertsons and Safeway banners in the remaining states.
Earlier this year, the Federal Trade Commission issued an administrative complaint and authorized a lawsuit in federal court to block the proposed merger between the two companies, which was first announced in October 2022. Regulators and unions have expressed concerns that the merger will lead to higher prices, store closures and job losses.
Based in Cincinnati, Kroger operates 2,800 stores, including more than 100 stores in Southeast Texas and Louisiana, under a variety of banners across the U.S., including Kroger, Fred Meyer, Ralphs, Dillons, Smith's, King Soopers, Fry's, QFC, City Market, Owen's, Jay C, Pay Less, Baker's, Gerbes, Harris Teeter, Pick 'n Save, Metro Market and Mariano's.