Kroger’s meager sales growth adds to cloudy view of US shoppers
Kroger Co.’s sales inched up last quarter, and that was enough to win over investors who’ve been wading through mixed results among U.S. retailers.
Comparable sales rose 0.5% last quarter, the largest U.S. supermarket operator said in a statement. That topped what analysts expected. Growth had stalled in recent quarters, a reflection of business normalizing after the pandemic and the highest inflation in decades boosted results.
“The good news from Kroger is that performance has picked up since the last quarter,” Neil Saunders, a retail managing director at GlobalData, said in a research note. “However, the not so good news is that performance remains anemic with overall sales and comparable revenue virtually flat over last year.”
The stock rose 2% at 9:30 a.m. in New York. The shares had gained 14% this year before Thursday.
Kroger’s results add to a cloudy picture of the retail landscape. U.S. shoppers have remained resilient, though they are holding off on some bigger purchases. Many are turning to cheaper store brands and visiting multiple retailers to save money. Grocery inflation, which helped boost Kroger’s revenue, has also eased.
Walmart Inc., the world’s largest retailer, said sales rose last quarter. Meanwhile at Target Corp., revenue fell for the fourth consecutive quarter, partly due to pullback in discretionary spending.
Store Execution
Kroger said total households and customer visits increased during the quarter due to personalized discounts and improved store execution.
Adjusted earnings came in at $1.43 a share for the quarter, better than the average analyst estimate. The company reiterated its guidance for the full year.
Kroger, which runs several chains including Ralphs and Dillons, is trying to become an even bigger presence in the U.S. by acquiring Albertsons Cos. for $24.6 billion, but the U.S. Federal Trade Commission sued in February to block the proposed deal. Hearings are expected to begin later this summer.
Kroger said it paused its share repurchase program to cut debt after the proposed Albertsons deal.