Kroger Rings Up More Profit Despite Slashing Prices
November 30 2017 - 9:20AM
Dow Jones News
By Imani Moise
Kroger Co. posted results that beat analysts' expectations for
the third quarter as lower food costs offset price cuts at its
stores.
Shares jumped 7.5% to $26.28 during premarket trading Thursday
as the earnings might help quell concerns that Kroger has lost
market share to rivals.
The largest supermarket chain in the U.S. has been investing
heavily to position itself to better compete against Amazon.com
Inc. and Wal-Mart Stores Inc. as the retail giants battle for
market share in the grocery business.
The company has also been ramping up its e-commerce efforts in
the wake of Amazon's recent acquisition of Whole Foods Market.
Kroger said digital revenue more than doubled in the latest
quarter.
Earlier this month, Wal-Mart posted strong gains in its grocery
business where it is the No. 1 or No. 2 competitor in 94% of
Kroger's major markets, BMO Capital Markets wrote in a research
note.
Gross margin grew 0.30 percentage point as the lower prices
needed to compete were balanced out by reduced food costs.
Leading up to the holidays, Kroger said it expects growth to
continue, projecting comparable sales to increase 1.1% in the
current quarter.
"The holidays are always Kroger's time to shine," said Chief
Executive Rodney McMullen in prepared remarks.
Sales at established stores excluding fuel grew 1.1%, which
topped expectations. Including fuel, comparable sales grew 2.4% as
gasoline prices reached a two-year high during the most recent
quarter.
Kroger reported a net profit of $397 million, or 44 cents a
share, compared with $391 million, or 41 cents a share, a year ago.
Overall sales rose 4.5% to $27.75 billion.
Analysts polled by Thomson Reuters had forecast per-share
earnings of 40 cents on $27.46 billion in sales.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
November 30, 2017 09:05 ET (14:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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