Kroger's Sales Rise after Digital Investments
September 12 2019 - 10:06AM
Dow Jones News
By Jaewon Kang
Kroger Co. reported slightly higher sales in its latest quarter
after recent investments in online ordering and other efforts to
draw in new customers.
The increase to $28.2 billion in sales from $28 billion a year
earlier was lower than the gains analysts expected though, and
profit declined to $297 million, also missing forecasts.
The Cincinnati-based supermarket chain reported a 2.5% increase
in same-store sales excluding fuel, up from the corresponding
period a year ago and beating an estimate of 1.9% growth. Digital
sales grew 31%.
Kroger's shares rose 0.8% in premarket trading on Thursday to
$25.57.
The nation's largest supermarket chain is trying to keep its
footing in the rapidly changing grocery industry. Like other food
retailers, Kroger faces pressure to keep prices low as it invests
in delivery to compete better against Amazon.com Inc. and Walmart
Inc., the nation's top grocery seller.
Walmart and Target Corp. posted higher sales in their most
recent quarters thanks to investments that have boosted digital
sales. Discounter Grocery Outlet Holding Corp., which went public
in June, unveiled ambitious plans to grow the number of its stores
by 10% annually. Organic grocer Sprouts Farmers Market Inc.
recently lowered its guidance for the full year as growth continues
to slow.
Kroger is in the middle of a three-year plan to revive its
business. The company is expanding its digital capabilities,
investing in technology and making more hires. It is also
overhauling stores and building automated warehouses as part of its
partnership with British retailer Ocado Group PLC.
The owner of Fred Meyer, Ralphs and Harris Teeter stores has
said the growth plan should generate $4 billion of free cash flow
and add $400 million in operating margins by 2020 through cost
savings and better sales.
Kroger is also trying to add new products to attract more
customers. The 136-year-old company has added clothing items and
financial services to its sales strategy, as well as new grocery
items like store-branded meatless burger patties.
(END) Dow Jones Newswires
September 12, 2019 09:51 ET (13:51 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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