The Kroger Co. exceeded analyst expectations for revenue and net earnings in the second quarter of fiscal 2021, and raised its full-year guidance.
The grocery giant reported total company sales of $31.69 billion in the quarter ended Aug. 14, up 3.9% from $30.5 billion in the year-ago period. Excluding fuel, sales decreased 0.4% compared to the same period in 2021. Digital sales fell 13% in the quarter but were up 114% on a two-year basis.
On the company's earnings call, Kroger chairman and CEO Rodney McMullen told analysts that “food-at-home trends," which have maintained momentum during the pandemic, " remain sticky."
Kroger reported second-quarter profits of $467 million, or $0.61 per share, down 43% compared to $819 million, or $1.03 per share, in the year-ago quarter. Adjusted earnings per share were $0.80, up 9% from $0.73 a year earlier.
The chain formed several new partnerships in the second quarter, including partnering with ghost kitchen startup Kitchen United. The venture will allow select Kroger locations to provide customers with freshly prepared restaurant food for takeout or delivery. Most recently, it announced the launch of a new mobile training program for its nearly 500,000 associates.
"Our strategic focus on leading with fresh and accelerating with digital continues to build momentum across our business,” said Kroger chairman and CEO Rodney McMullen. “Kroger's seamless ecosystem is working. This was evident during the quarter as we saw customers seamlessly shift between channels, and we continued to see strong digital engagement. Customers are eating more food at home because it is more affordable, convenient, and healthier than other options. We are leveraging technology, innovation, and our competitive moats to deliver against the initiatives outlined at our 2021 investor day, and we remain confident in our ability to deliver total shareholder returns of 8% to 11% over time."
Kroger adjusted its full-year guidance based on its second-quarter results. The company now expects its two-year identical sales stack to be in the range of 12.6% to 13.1%, and year-over-year identical sales to decline 1-1.5%. It expects adjusted net earnings per diluted share to be in the range of $3.25 to $3.35.
[Read more: Kroger fights hunger – across channels]
"Kroger's strong execution resulted in identical sales above our internal expectations for the second quarter, and we continued to remove costs from the business,” said Kroger CFO Gary Millerchip. “Driven by the momentum in our results and sustained food at home trends, we are raising our full-year guidance. We are emerging stronger through the pandemic and are confident in our ability to deliver sustainable earnings growth and total shareholder return."
Based in Cincinnati, The Kroger Co. operates 2,800 grocery retail stores under the banners Kroger, 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, Mariano’s, Fred Meyer, Dillons Marketplace, Fry’s Marketplace, King Soopers Marketplace, Kroger Marketplace, Smith’s Marketplace, Food 4 Less, and Foods Co.