Kroger on Thursday forecast annual same-store sales largely above Wall Street estimates, fuelled by steady grocery demand as shoppers seek low-priced staples such as fruit and vegetables.
Shares of the supermarket train rose 5% in early trading on the forecast that came amid uncertainties following an abrupt ousting of long-time chief executive Rodney McMullen earlier in the week, as well as escalating trade tensions.
CFRA analyst Arun Sundaram said, “The forecast was strong, in our view, especially given heightened uncertainties this year.”
Kroger has also been dealing with the termination of a two-year effort to buy rival Albertsons after courts blocked the $25 billion deal.
Albertsons subsequently sued Kroger, alleging breach of contract that led to the deal’s demise.
The Cincinnati, Ohio-based grocer has, however, been benefitting from capitalising on strong e-commerce demand by offering customers convenient curb side pick-up and faster order delivery.
This helped the company better compete with retailers Walmart, Target and Amazon.
Kroger reported an 11% jump in fourth-quarter digital sales.
Forecast
It forecast growth in full-year identical sales, excluding fuel, in the range of 2% to 3%, compared with analysts’ average estimate of a 1.96% rise, according to data compiled by the London Stock Exchange Group (LSEG).
It also projected 2025 adjusted earnings of $4.60 to $4.80 per share, compared with estimates of $4.79.
US big-box retailers – unlike Kroger – have taken a cautious stance, fearing weak economic data and uncertainty around consumer spending as trade wars spark concerns of a deceleration in the American economy.
Kroger’s pharmacy business has been a bright spot, boosted by sales for GLP-1 medications, used for both weight loss and managing chronic conditions such as diabetes.
The company has also benefitted from expanding its private brand portfolio in 2024.
It posted a 2.4% rise in fourth-quarter identical sales, excluding fuel, compared with analysts’ average estimate of a 1.96% rise, according to data compiled by LSEG.
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