Salem Radio Network News Sunday, January 16, 2022

Business

Grocery chain Kroger lifts forecast as home cooking stays hot

By Uday Sampath Kumar

(Reuters) -Kroger Co raised full-year sales and profit forecasts after its results topped estimates on Thursday, as a sustained boom in at-home cooking boosts demand for the retailer’s groceries, sending its shares up 7%. A rise in U.S. COVID-19 cases during the third quarter also boosted sales at grocers, with some such as Costco Wholesale Corp forced to reinstate limits on purchases of items including tissues, roll towels and bottled water, as consumers resumed hoarding goods.

“If we had surveyed investors three or six months ago and asked if they thought it was possible for Kroger to post these kind of results in late 2021, when consumers headed back to schools and offices, we think very few would have responded yes,” J.P. Morgan analyst Ken Goldman said.

“All in, this was a very healthy print, as we see it, and the stock deserves to be up.”

Americans have held on to many habits picked up during the pandemic, including cooking at home, keeping sales at grocery chains elevated, even as virus restrictions have been eased.

Kroger’s heavy spending on increasing shipping capacity due to supply-chain disruptions and its attempts to keep prices low despite cost inflation led to a 41 basis point decline in its third-quarter adjusted gross margin rate.

Still, in contrast to discount retailer Dollar General’s tepid forecast on Thursday, Kroger said it expects full-year adjusted earnings per share of $3.40 to $3.50, compared with its prior forecast of $3.25 to $3.35.

The company also expects annual same-store sales to dip 0.2% to 0.4%, compared to a fall of 1% to 1.5% it forecast previously.

Kroger third-quarter sales rose 7.2% to $31.86 billion, beating analysts’ estimates of $31.23 billion, according to Refinitiv IBES data.

Excluding one-time items, Kroger earned 78 cents per share, beating estimates of 66 cents per share.

(Reporting by Uday Sampath and Ananya Mariam Rajesh in Bengaluru; Editing by Vinay Dwivedi)

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