Kruger On Thursday, it raised its forecast for the year after strong third-quarter sales beat Wall Street expectations and inflation continued to drive the prices shoppers pay for milk, eggs and other groceries.
Kroger CEO Rodney McMullen said the company attracts shoppers by offering value. In a press release, he said it “resonates with shoppers and increases customer loyalty” through affordable grocery and fresh food brands, data-driven promotions and a fuel rewards program.
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That’s what Kruger said for the three-month period ending in November. 5, compared to Refinitiv consensus estimates:
- Earnings per share: 88 cents adjusted vs. Expect 82 cents
- he won: $34.2 billion vs. $33.96 billion expected
Groceries have been a strong driver for retail sales as inflation hovers near a four-decade high. As some shoppers skip pricey items or hold back on discretionary purchases, retailers selling food and essentials have attracted a steady stream of customers.
WalmartThe grocery company, the nation’s largest grocer by revenue, raised its full-year outlook after posting a strong third quarter. The big-box retailer said its lower-priced groceries have attracted more shoppers — including a growing number of families with annual household incomes of more than $100,000 a year.
At Kroger, comparable sales rose 6.9%, excluding fuel, in the third quarter. The industry-specific measure includes sales in supermarkets that have been in continuous operation for at least 15 months. That beat expectations for 4% growth, according to FactSet.
The operator of Ralphs, Fred Meyer and other supermarket chains now expect the scale to rise 5.1% to 5.3% for the year. It previously forecast growth of 4% to 4.5%.
Third-quarter net income fell to $398 million, or 55 cents per share, from $483 million, or 64 cents per share, a year earlier.
For the full year, Kroger now expects adjusted net earnings to be in the range of $4.05 to $4.15. Previously, it expected between $3.95 and $4.05.
Some retailers, such as license plate And the kohl, a significant decline in spending. Kroger didn’t see the same thing, McMullen said, in part because it costs less to cook at home than to eat out.
“When we talk to our customers, they tell us they’re changing,” he said. “But so far they change when buying other than food.”
Still, he said, customers are eager to save: They’re downloading digital coupons, choosing items in promotion and buying more private-label products than before, he said.
McMullen said sales growth for private label brands, which tend to be cheaper than national name brands, outpaced the company’s overall sales growth in the quarter.
One such brand is Smart Way, Kroger’s lowest-cost brand, which sells packaged foods, bread, and other staples. The company launched the product line last quarter as customers faced inflation-related sticker shock. McMullen said Kroger plans to add more products to this line in the coming months.
Kroger announced in October that it plans to buy its competitor, AlbertsonIn a deal worth $24.6 billion. The acquisition, if approved, would bring together the nation’s second- and fourth-largest grocer by revenue, according to data from Numerator, a market researcher.
Kruger faced opposition over the deal from elected officials and even its own employees, who said it would hurt competition. Earlier this week, McMullen testified before senators who opposed the merger at a congressional hearing. The combined company will lower food prices and improve the customer experience, he said, as Kroger competes with grocery giant Wal-Mart and newer players in the industry such as Amazon.
As of Wednesday’s close, Kroger shares are up about 9% so far this year. Shares closed Wednesday at $49.19, down less than 1%. Its market value is $35.21 billion.
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