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Kroger Sales Rise on Steady Demand for Groceries, Essentials
Grocery Giant Sets Sights on Walmart, Costco and Amazon
Key Takeaways:
- Kroger reported June 18 that same-store sales rose 1% excluding fuel, topping Wall Street expectations as shoppers focused spending on groceries.
- The gain reflects budget-conscious consumers amid inflation and higher fuel costs, while profits were pressured by transportation expenses, price cuts and lower egg prices.
- Kroger plans broader price reductions under CEO Greg Foran to compete with Walmart, Costco and Amazon, while maintaining full-year guidance despite margin pressures.
Kroger Co.’s sales exceeded expectations during the latest quarter, suggesting that U.S. shoppers are prioritizing groceries and other necessities as they closely watch their budgets.
The nation’s largest supermarket operator said June 18 that same-store sales grew 1% excluding fuel. This was slightly better than the 0.96% growth that Wall Street analysts were anticipating.
Kroger is seeking to gain market share under new CEO Greg Foran. After taking the helm in February, Foran told Bloomberg News last month that he plans to implement Kroger’s biggest price cuts in years to be more competitive against rivals such as Walmart Inc., Costco Wholesale Corp. and Amazon.com Inc.
Shares were little changed during premarket trading. Kroger maintained its full-year guidance, though its quarterly profits were squeezed by higher transportation costs, planned price cuts and lower egg prices.
Years of high prices have led many consumers to shift to cheaper store brands and sale items when shopping for food. The recent spike in gas prices due to the Iran War has further strained household budgets, with U.S. inflation accelerating in May to the fastest pace in more than three years. Within groceries, prices have been increasing for beef, coffee and some types of produce.
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Foran
Kroger, whose stores include the Fred Meyer and Ralphs chains, is laying the groundwork to lower prices across product categories and offer friendlier, faster services. Walmart and Costco have also said in recent weeks that they would continue to prioritize value and keep prices competitive as shoppers look for deals.
“We are pleased with our first-quarter results, but we know there is more work to do,” Foran said in a statement.
U.S. retail sales rose last month across a broad range of categories. Some companies have said lower-income shoppers are becoming more budget-conscious while affluent consumers continue to spend.
Kroger ranks No. 31 on the Transport Topics Top 100 list of the largest private carriers in North America, and No. 3 on the TT grocery list. Costco ranks No. 53 on the private carriers list.
Amazon ranks No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America, No. 15 on the private carriers list and No. 1 on the TT Top 50 list of the largest global freight companies.
