Kroger Rings Up Gains in Fight Against Wal-Mart, Amazon -- 2nd Update
November 30 2017 - 2:29PM
Dow Jones News
By Heather Haddon
Kroger Co. boosted sales by improving online ordering and
cutting prices at its stores, a sign of progress in the grocer's
fight against rising competition from discounters and Amazon.com
Inc.
The Cincinnati-based chain said Thursday that sales grew by 1.1%
in the quarter ended Nov. 4 at its established stores, topping
expectations. Kroger expects sales to increase by a wider margin in
the fourth quarter by that same metric, which excludes fuel
sales.
Digital revenue more than doubled in the third quarter as Kroger
added grocery delivery at 300 locations. Kroger plans to have 1,000
stores outfitted to fill online orders by the end of the year, and
is paying for the e-commerce rollout and price cuts in part by
setting tougher terms for its suppliers.
"The pieces that we have in place, when we do those things and
manage our costs, obviously you will grow your business," said
Chief Executive Rodney McMullen in an interview.
Kroger's shares were up 8% early Thursday afternoon. Shares in
Costco Wholesale Corp. and other food retailers also climbed.
Kroger's stock has risen nearly 30% in November, its best month
since 1988, according to the WSJ Market Data Group.
Kroger is diversifying to attract new customers, including a
focus on prepared foods to compete with restaurants. "We see anyone
who sells food as competitors," Mr. McMullen said. "If you are
eating, we want to serve you that meal."
That quest for revenue is driven in part by intensifying
competition for Kroger's core customers. Wal-Mart Stores Inc. is
competing more aggressively for grocery dollars, sprucing up
stores, slashing prices and expanding e-commerce offerings. Costco
is expanding online sales, and it reported strong November sales
growth on Wednesday. European discounters Aldi and Lidl have opened
more U.S. stores this year. And Whole Foods Market has seen sales
climb since Amazon acquired it this summer.
Some analysts questioned whether Kroger can sustain progress
against emboldened competitors. "We still have our reservations
about this story, " wrote Ken Goldman, senior analyst at J.P.
Morgan, in a note to investors.
Kroger's other efforts to appeal to new customers include its
first free-standing restaurant, a high-end floral line that made
its debut for the holidays and a clothing line that Kroger plans to
place in stores next year.
Kroger posted profits of 44 cents a share in the third quarter.
Analysts polled by Thomson Reuters had expected earnings per share
of 40 cents. The company reported a net profit of $397 million, or
44 cents a share, compared with $391 million, or 41 cents a share,
a year ago. Revenue grew 4.5% to $27.75 billion.
--Imani Moise contributed to this article.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
November 30, 2017 14:14 ET (19:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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