Kroger Reports Modest Gains In Q1
First quarter sales at Kroger were up slightly as the grocer reported a decrease in gross margin impacted by lower pharmacy margins and increased price investments partially offset by favorable product mix reflecting strong performance of its Our Brands.
Total company sales were $45.3 million, up slightly from sales of $45.2 million in the comparable quarter the previous year. Identical sales were up 0.5% when excluding the impact of fuel sales and other adjustment items.
“We're off to a solid start in 2024, reflecting the strength and diversity of our model as better-than-expected performance from our grocery business helped us manage fuel and health and wellness results that were behind expectations,” said Rodney McMullen, chairman and CEO of Kroger. “As inflation moderates, we expect customer sentiment to continue improving.”
McMullen said consumers continue to seek value and are shopping at Kroger stores differently based on their financial situations. Mainstream households drove overall growth and the grocer improved its share of wallet with premium customers that are spending more on fresh products and on premium items such as Private Selection.
Among the first quarter highlights were the launch of 348 new Our Brands products, and the launch of the Field & Vine brand, which offers high quality and regionally grown berries.
“Our ongoing work to differentiate and elevate our brands is driving higher profitability,” he said. “We are identifying new supply sources, using more effective promotions, and improving product mix, which is contributing to further margin improvements. Kroger is providing exceptional value and a unique omnichannel experience, which led to an increase in customer visits.”
Figures from Placer.ai show growth in shopper visits across several Kroger company banners. Kroger-bannered stores were up 3.6%, Fred Meyer up 1.7%, Smith’s up 8.3%, Fry’s up 5.0%, Food 4 Less up 5.7%, King Soopers up 6.7%, Ralphs up 3.4%, and Harris Teeter up 5.6%.
Looking ahead, Kroger’s full-year guidance calls for identical sales growth (without fuel) of between 0.25% and 1.75%. Adjusted FIFO operating profit is expected between $4.6 and $4.8 billion with adjusted net earnings per diluted share of $4.30 and $4.50.
