Kroger Bullish On Earnings As Supermarket Giant Takes On Digital World

Kroger Co. “has reinvented the company’s business model to deliver consistently strong and attractive total shareholder return,” the company said in a press release on Tuesday (Oct. 27). The Cincinnati-based supermarket giant said its “Restock Kroger” framework will generate shareholder returns of 8 to 11 percent.

Restock Kroger is the company’s program to improve shipping, distribution and the links between its online and offline businesses.

The company made “several strategic decisions three years ago” to better service its customers, Kroger Chairman and CEO Rodney McMullen said in the release. “We believed customers would continue to move to a seamless shopping platform that combined the best of physical and digital experiences. These choices and investments have positioned Kroger to more effectively respond to the pandemic,” he said.

Gary Millerchip, Kroger’s chief financial officer, said, “Prior to the pandemic, Kroger’s early results in 2020 were strong and while the pandemic has clearly been a tailwind to our business, we’ve been very pleased with the underlying progress with all key components of our model.”

The company’s second-quarter earnings, reported last month, saw total company sales rise to $30.5 billion, compared to $28.2 billion for the same period last year. Excluding fuel, sales grew 13.9 percent, the company said in a news release at the time.

The company also  increased its dividend by 13 percent and repurchased $211 million shares, the second-quarter announcement said.

In the previous quarter, Kroger actually had a 19 percent jump over first-quarter 2019, with a total sales take of $42 billion. In part this was due to a spike in digital sales of 92 percent.

In Tuesday’s press release, Kroger was bullish on its future.

Through the Restock Kroger program, McMullen said, the company is “achieving cost savings of over $1 billion each year” and re-investing that into the business. “We have returned approximately $6.4 billion to shareholders via dividends and repurchased shares since the beginning of fiscal 2017. Kroger is growing market share and our Total Shareholder Return has outperformed the market and our peer group over the last 12 months.”