Kroger Co | $KR Stock | Shares Shrink On Same-Store Sales Miss

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Kroger

Kroger Co (NYSE: KR)

 

Kroger stock lost $3 or 9% in the first hour of normal trading on Thursday after the supermarket chain failed to impress investors with its full-year same-store sales growth.

The Ralphs and Fred Meyer owner posted comparable sales growth of 1.6% for its fiscal second-quarter that was below Street expectations of 1.9% increase.

The retailer currently has a market cap of about $25 billion, thanks to a stock rise of 15% year to date. However, it now appears to be lagging behind other brick-and-mortar rivals like Sprouts Farmers Market Inc., Target Corp and Walmart Inc.

KR Earnings & Outlook

Kroger reported net income of $508 million, or $0.62 per share, an improvement from $353 million, or $0.39 per share in the prior-year quarter. Adjusted for one-time items, the supermarket earned $0.41 per share.

Net sales jumped from $27.60 billion in the same period last year to $27.87 billion. Analysts surveyed by Thompson Reuters had predicted adjusted earnings of $0.38 per share on net sales of $27.93 billion. Comparable sales increased 1.6% missing Wall Street estimates for 1.8% growth.

For the full year, the company sees comparable sales growth in the range of 2.0% and 2.5%. Kroger has set its net earnings guidance at between $3.88 and $4.03 per share, compared with its earlier forecast of $3.64 to $3.79 per share. Its diluted earnings guidance is in the range of $2.00 to $2.15 per share.

Kroger CEO Comments

Rodney McMullen, the chairman and chief executive officer of Kroger commented, “We are only two quarters into our three year Restock Kroger plan, and we are making solid progress. Kroger customers have more ways than ever to engage with us seamlessly through our recently-launched Kroger Ship, expanded availability of Instacart, successful ClickList offering, and selling Simple Truth in China through Alibaba’s Tmall.”

“We feel good about our net earnings per diluted share and ID sales results in the second quarter. We expect our investments in space optimization during the first half of 2018 to become a tailwind late in the third quarter. We are on track to generate the free cash flow and incremental FIFO operating profit that we committed to in Restock Kroger for 2018-2020, and to deliver on our long-term vision to serve America through food inspiration and uplift,” McMullen concluded.

Kroger Company Profile

The Kroger Co. engages in the operation of retail food and drug stores, multi-department stores, jewelry stores, and convenience stores. It also manufactures and processes some of the food for sale in its supermarkets. The combination food and drug Stores are the primary food store format.

The multi department stores sells a wide selection of general merchandise items such as apparel, home fashion and furnishings, electronics, automotive products, toys and fine jewelry. The marketplace stores offer full-service grocery and pharmacy departments as well as an expanded general merchandise area that includes outdoor living products, electronics, home goods and toys.

The price impact warehouse stores offer a ‘no-frills, low cost’ warehouse format and feature everyday low prices plus promotions for a wide selection of grocery and health and beauty care items. The company was founded by Barney Kroger in 1883 and is headquartered in Cincinnati, Ohio. –CNNMoney

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