Kroger Q1 shows massive digital jump

Dan Ochwat
Executive Editor
Dan Ochwat profile picture

More monumental numbers for Kroger amid the COVID-19 pandemic. First quarter earnings for the retailer showed a 92% boom in digital sales, while total company sales (excluding fuel) rose more than 19%.

Kroger CEO Rodney McMullen also remarked on its three-year transformation plan, Restock Kroger, saying, “Under Restock Kroger, we have made significant investments over the last several years to establish a seamless digital ecosystem, strengthen Our Brands and our personalization capabilities, and to enhance product freshness and quality. These investments helped Kroger deliver improved results in 2019, a strong start to the quarter, and very much came to the forefront as we provided our customers with the fresh food and essentials they have needed during the pandemic.”

Also key to the success of the quarter that ended May 23 is continued stock-up shopping habits during the pandemic, but the retailer is cautious of how the situation could shift at any moment.

"The COVID-19 pandemic has dramatically changed the outlook for food retail in 2020 and we continue to monitor, evaluate and adjust our plans to address the impact to our business. There are still many unknown factors related to the long-term impact of COVID-19 that could influence our financial results for the remainder of 2020,” said Gary Millerchip, chief financial officer, Kroger. He noted three keys that could impact future growth: long-term shifts of customers eating more at home; continued investments to help our customers and associates; and uncertainty of how consumers will behave around the pandemic’s restrictions and changes.

In light of it all, total company sales were $42 billion in the first quarter, compared to $37 billion for the same period last year. Excluding fuel and dispositions, sales grew 19.1%. Gross margin for Kroger was 24.3% of sales for Q1. In April, Kroger reported March sales gains that told a similar story.

“The COVID-19 pandemic and the most recent instances of racial injustice have changed our country in unmistakable ways, not the least of which is the devastating loss of life and livelihood that has affected so many Americans," McMullen said. “Kroger remains guided by our purpose and our values. I am proud of our associates who stepped up when we were called to be there for our customers, communities and each other. Our company is proud to stand with our Black associates, customers and communities against racism and for a more just and equitable society.”

Part of a long list of activity from the retailer, during the quarter, Kroger made the decision to contribute an additional $236 million to multi-employer pension plans, helping stabilize associates' future benefits. 

The company also provided a litany of actions and here are just a few:

  • Hosting virtual listening sessions to hear directly from Black associates and how we can better support them
  • Shared an Allyship Guide developed by its African American Associate Resource Group
  • Established a $5 million fund via The Kroger Co. Foundation to support the advancement of diversity, equity and inclusion in communities
  • Hired more than 100,000 new associates
  • Tested 82,199 patients in 15 states as one of only five U.S. retailers to develop, staff and expand a free COVID testing model in partnership with the federal and state governments
  • Offered walk-up testing sites to support the most vulnerable in communities
  • Offered customers new ways to meaningfully give back through charitable giving platforms online, via Kroger Pickup orders, and at check lanes across nearly 2,800 locations
  • Activated The Kroger Co. Zero Hunger | Zero Waste Foundation's Emergency COVID-19 Response Fund to help families disproportionately impacted by COVID-19. To-date, Kroger and the Foundation have committed more than $8 million to nonprofit organizations addressing urgent COVID-19 response efforts
  • Expanded Dairy Rescue Program to support children and families during the COVID-19 pandemic through the summer months.