Last updated on August 17th, 2018
The Kroger Co. is reporting net earnings of $2.0 billion, or $2.37 per diluted share, in the first quarter of 2018, which ended on May 26. Kroger’s first quarter adjusted net earnings were $626 million, or $0.73 per diluted share. Net earnings for the first quarter of 2017 were $303 million, or $0.32 per diluted share. Adjusted net earnings for the first quarter 2017 were $546 million, or $0.58 per diluted share.
Kroger’s first quarter net earnings per diluted share result were slightly ahead of the company’s internal expectations, and Kroger is crediting that boost to its Restock Kroger initiative, including “process changes that led to especially strong cost controls and alternative revenue streams.”
“Restock Kroger is off to a fantastic start. Everything we do supports our customers engaging seamlessly with Kroger,” said Rodney McMullen, Kroger chairman and CEO. “Kroger is creating the future of retail by innovating our core business and adding exciting partnerships like Ocado and our planned merger with Home Chef. We are on track to generate the free cash flow and incremental FIFO operating profit that we committed to in Restock Kroger. We are confident in our ability to deliver on our plans for the year and our long-term vision to serve America through food inspiration and uplift.”
Kroger reported identical supermarket sales, without fuel, of 1.4 percent for the first quarter of 2018. When calculating identical sales to be more inclusive of company business units—including Kroger Specialty Pharmacy and ship-to-home solutions—Kroger’s identical sales, without fuel, were 1.9 percent in the first quarter. The company says it intends to use this calculation going forward as a more appropriate measure to track Kroger’s performance as it “redefines the grocery customer experience,” and to be more comparable with how peers report.
Total sales increased 3.4 percent to $37.5 billion in the first quarter compared to $36.3 billion for the same period last year. Total sales, excluding fuel, increased 2.3 percent in the first quarter over the same period last year. Excluding fuel and the effect of Kroger’s recently-sold convenience store business unit, total sales increased 2.8 percent.
Looking ahead
Kroger expects identical sales growth, excluding fuel, to range from 2.0 percent to 2.5 percent in 2018. This reflects the company’s updated definition of identical sales and is supported by its expectation for identical supermarket sales that is the same as its original guidance for the year.
Kroger raised the low end of its net earnings guidance range to $3.64 to $3.79 per diluted share for 2018. The previous GAAP range was $3.59 to $3.79. The company raised the low end of its adjusted net earnings guidance range to $2.00 to $2.15 per diluted share for 2018, from $1.95 to $2.15 previously.
The company continues to expect capital investments, excluding mergers, acquisitions and purchases of leased facilities, to be approximately $3.0 billion in 2018.
“When we announced Restock Kroger, we talked about retailers needing to constantly reinvent themselves. It takes time to do this. We’re now past the half-way point, and everything we are doing today is transforming our business for renewed growth,” said McMullen during an investor conference call. “For 2018, we are a little ahead of where we thought we’d be. We’re hitting our cost control targets due to process change, improving the associate experience, and innovating to create the future of retail. That innovation is both internal and external. We are joining up with external partners like Ocado and Home Chef to create customer value while also quickly expanding our seamless coverage area.
“We remain confident in our ability to deliver on both our plan for the year and to execute Restock Kroger over the next three years, which will create shareholder value.”
Keep reading:
Kroger-Exclusive Magazine Partners With Myxx On Shoppable Recipes
Kroger Will Accelerate Meal Kit Growth With Home Chef Merger
