Kroger reports 10.9% comp sales gain in Q3

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CINCINNATI — Kroger reported third quarter comparable store sales growth that beat Wall Street expectations, increasing 10.9% (excluding fuel). Digital sales grew by 108%.

The retailer’s earnings also topped expectations.

Rodney McMullen

Rodney McMullen

Kroger earnings for the three months ended November 7 were $631 million, or 80 cents per share. That compares to $263 million, or 32 cents per share, in the prior year period. Adjusted earnings per share came in at $0.71, ahead of the $0.66 that Wall Street analysts were expecting.

Total company sales were $29.7 billion in the third quarter, compared to $28.0 billion for the same period last year. Excluding fuel and dispositions, sales grew 11.3%.

“We delivered strong results in the third quarter,” Kroger chairman and chief executive officer Rodney McMullen said. “Customers are at the center of everything we do and sales remain elevated as we continue to enhance our competitive moats — fresh, our brands, data and personalization and seamless. We are executing against our strategy even during the pandemic and continue to grow market share.

“The strong underlying momentum in our core supermarket business and acceleration in the growth of our alternative profit business demonstrates we are successfully transforming our business model to deliver consistently strong and attractive total shareholder return in 2020 and beyond.”

McMullen also praised the company’s employees efforts for their efforts during the pandemic, crediting them with driving the company’s results during the quarter and the year so far.

“Our Kroger family of associates have been nothing short of incredible during the pandemic and they continue to inspire me every day,” he said. “I am proud of our dedicated associates who continued to diligently execute our Restock Kroger transformation while serving our customers when they need us most.”

Total company sales were $29.7 billion in the third quarter, compared to $28.0 billion for the same period last year. Excluding fuel and dispositions, sales grew 11.3%.

Gross margin was 23.0% of sales for the third quarter. The FIFO gross margin rate, excluding fuel, decreased 2 basis points compared to the same period last year. This decrease was primarily driven by price investments and mix changes, offset by sourcing efficiencies, sales leverage and growth in alternative profit streams.

“As a result of our continued strong performance, market share growth and the expectation of sustained trends in food at home consumption for the remainder of our fiscal year, we are raising our full year 2020 guidance,” Kroger chief financial officer Gary Millerchip said. “For the full year 2020, we expect total identical sales without fuel to be around 14% and adjusted EPS growth of 50% to 53%.

“Our guidance contemplates continued investments in associates and customers plus ongoing COVID-19 related costs, balanced with continued execution of cost savings initiatives and growth in alternative profit businesses.

“Looking toward 2021, we believe that our performance will be stronger than we would have expected prior to the pandemic when viewed as a two-year stacked result for identical sales without fuel growth and as a compounded growth rate over 2020 and 2021 for adjusted earnings per share growth.”



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