hooks Reuters raised its forecast for the year on Thursday after strong fiscal third-quarter sales topped Wall Street expectations and inflation continued to weigh on the prices shoppers pay for milk, eggs and other groceries.
Kroger CEO Rodney McMullen said the company is attracting shoppers by offering value. In a news release, it said it has “resonated with shoppers and grown customer loyalty” with its private-label grocery brands, affordable fresh foods, data-driven promotions and fuel rewards program.
Kroger reported for the three-month period ended Nov. 5, compared to Refinitiv consensus estimates:
- earnings per share: 88 cents adjusted vs. 82 cents expected
- revenue: $34.2 billion vs. $33.96 billion expected
Grocery has been a strong driver of retail sales as inflation nears a four-decade high. As some shoppers shun big-ticket items or shy away from discretionary purchases, retailers that sell food and necessities have attracted a steady stream of customers.
walmartCountry’s largest grocer by revenue also raised its full-year outlook After reporting a strong third quarter. The big-box retailer said its low-price groceries are attracting more shoppers — including a growing number of households with annual household incomes of more than $100,000 a year.
At Kroger, same sales excluding fuel grew 6.9% in the third quarter. Industry-specific metrics include sales at supermarkets that have been in operation for at least 15 consecutive months. According to FactSet, this is higher than the expectation of 4% growth.
Operators of Ralphs, Fred Meyer and other supermarket chains now expect the metric to climb to 5.1% to 5.3% for the year. It had earlier forecast a growth of 4% to 4.5%.
Net income in the third quarter 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 income to range from $4.05 to $4.15. Earlier it was expected between $3.95 and $4.05.
some retailers, such as target And Cole’sA significant reduction in expenditure has been reported. McMullen said Kroger hasn’t seen anything like it, because cooking at home costs less than eating out.
“When we talked to our customers, they were telling us they are changing,” he said. “But so far they are turning it over to purchases other than food.”
However, he said customers are eager to save: They’re downloading digital coupons, choosing items on promotion and buying private-label products more than ever, 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 of those brands is Smart Way, Kroger’s least expensive private-label brand, which sells packaged food, breads 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 that line in the coming months.
hooks announced in october that it plans to buy out its competitor, Albertsons, in a deal valued at $24.6 billion. If the acquisition is approved, it would combine the second and fourth largest grossers in the country by revenue, according to data from market researcher Numerator.
Kroger has Deal faced pushback ffrom elected officials and even his own staff, who have said it would harm competition. Earlier this week, McMullen Testified before senators opposing the merger in congressional hearings. He argued that the combined company would lower food prices and improve the experience for customers, as Kroger competes with new industry players such as grocery giant Walmart and Amazon.
As of Wednesday’s close, shares of Kroger are up about 9% so far this year. The stock closed Wednesday down less than 1% at $49.19. Its market value is $35.21 billion.