Kroger sales rise as consumers continue to eat-at-home
The Kroger Co. called consumers' penchant to eat at home a “structural” change as opposed to a temporary one as it reported strong third-quarter sales. The company raised its full-year forecast even as higher supply-chain costs squeeze its profits.
The nation’s largest supermarket operator reported adjusted earnings of $0.78 per share for the quarter ended Nov.6, up 9.9% from the year-ago period. The results beat Street estimates of $0.66 per share.
Total sales rose 7.4% to $31.86 billion, beating analysts' estimates of $31.23 billion, from $29.7 billion in the year-ago period. Excluding fuel, sales increased 2.9% compared to the same period last year.
Identical sales, excluding fuel, rose 3.1% over the same quarter last year. They increased 14% on a two-year stack.
Digital sales on a two-year stack grew 103%. During the quarter. Kroger made a number of digital moves, including launching Kroger Delivery Now nationwide with Instacart to to provide 30-minute delivery, enabled by a “first-of-its-kind” virtual convenience store shopping experience. It also introduced an annual membership program, Boost by Kroger Plus, that provides free delivery and more.
In addition, Kroger announced a partnership with Bed Bath & Beyond and buybuy Baby on a national e-commerce experience via Kroger.com and a small-scale physical store pilot to expand home and baby product offerings.
“We are incredibly proud of our third quarter results and the underlying momentum in our business,” said Kroger chairman and CEO Rodney McMullen. “Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our seamless ecosystem.”
[Read More: Kroger plans Northeast entry with next-gen fulfillment centers]
McMullen said that customers are demonstrating more “back to normal” behaviors. At the same time, however, they are eating more food at home because “it is more affordable, convenient, and healthier than other options plus you can do it as a family.”
Kroger said has better in-stock position today than it did a year ago and had no problem to serve customers through the Thanksgiving holiday.
“We chose to incur significant costs in our supply chain during 2021 which has allowed us to provide for our customers today and into 2022,” McMullin said. “We continue to deploy a wide array of tools including our owned and operated fleet and are working closely with our suppliers to mitigate pain points for the customer.”
The company raised its full-year guidance, citing the momentum in its third quarter results and sustained food at home trends. It now expects its two-year identical sales stack to be in the range of 13.7% to 13.9%. Adjusted net earnings per diluted share are expected to be in the range of $3.40 to $3.50, up from its prior forecast of $3.25 to $3.35 per share.