The Kroger Co. reported better-than-expected second-quarter earnings and sales as consumers continue to eat at home more often than they did pre-pandemic. It also raised its forecast for the year.
The country’s largest grocery store retailer’s net income totaled $819 million, or $1.03 per share, for the quarter ended Aug. 15, up from $297 million, or $0.37 per share, last year. Adjusted earnings per share came in at $0.73 cents, easily topping analysts’ estimates of $0.54.
Sales rose to $30.49 billion from $28.17 billion last year, better than the $29.97 billion the Street had expected. On a presentation to analysts, CEO Rodney McMullen said that Kroger's assortment of private brands are driving overall sales and giving it a competitive edge. Sales of the company's premium store brand, Private Selection, rose 17% during the quarter. Sales of Simple Truth sales increased 20%, and store brand larger pack sizes were up by 50%.
Digital sales more than doubled, up 127%. Identical sales without fuel rose 14.6%, also more than expected. Kroger now has more than 2,400 grocery delivery locations and 2,100-plus pickup sites, giving it access to 98% of shoppers in its market area via brick-and-mortar stores and digital channels.
“Our top priority is to provide a safe environment for associates and customers and as the pandemic continues, we will continue to rise to meet the challenge,” stated McMullen. “Customers are at the center of everything we do and, as a result, we are growing market share. Kroger's strong digital business is a key contributor to this growth, as the investments made to expand our digital ecosystem are resonating with customers. Our results continue to show that Kroger is a trusted brand and our customers choose to shop with us because they value the product quality and freshness, convenience, and digital offerings that we provide.”
In the presentation to analysts. McMullen said that the company’s total COVID-19 incident rate continues to track "meaningfully below the rate in surrounding communities where we operate."
"We have learned and continue to learn a lot while keeping our stores and supply chain open and serving America during the pandemic," he added.
Kroger has authorized a new $1 billion share buyback program, which replaces a prior authorization. For the full year, Kroger expects identical sales without fuel to exceed 13% growth, with earnings per share expected to be $3.20 to $3.30. The Street estimate is for identical sales growth of 9.7% and earnings per share of $2.92.