The grocery market in the US has seen some big players of late like Walmart (WMT, Financial), Costco (COST, Financial), Whole Foods (WFM, Financial) and the like. Each of these companies has quite a few good points to their credit. However, one stock has managed to come up as one of the most promising stocks in the grocery sector. It is Kroger Foods (KR, Financial). The top management of this company is currently in the midst of launching some positive initiatives, due to which, Kroger Foods is well on its way to give its competitors a run for their money. The following figures are enough to prove this point – Kroger Foods had reported 35% gross profit margins for last year, whereas this number was 25%, 29% and 13% for Walmart, Target (TGT, Financial) and Costco respectively. Let us now see how Kroger Foods has been climbing up the corporate ladder effectively and successfully.
Great numbers look highly promising
The year 2014 was a good year for Kroger Foods as the company has posted some impressive numbers on its books. Its earnings per share had increased to $3.44 per share during this year, an increase of 19% from the previous year. The company set new records in terms of cutting costs as its operating expenses came down to a considerable extent for the 10th consecutive year. Kroger's rapid and consistent pace of growth is evident from the fact that its same store sales increased by a good 5.2% during 2014, which was higher by 3.6% from the figures reported during 2013.
Cost - cutting initiatives
Another factor that works in favour of Kroger Foods is its efficient cost cutting techniques. It has the liberty to cut costs on a variety of its operations because it has lots of production facilities to manufacture most of the goods that it sells. Since it makes these goods, Kroger is able to sell them at a much cheaper rate than a Walmart or Costco. In addition to this, Kroger enjoys a place of respect among wholesale suppliers as well because it creates massive orders for them. On an average, the annual sales figure of the company is worth close to $110 billion. Close to $3.5 billion is earmarked by the company every year, towards investing in cost cutting initiatives. Through affordable products and high-quality customer service, Kroger Foods has silently taken over the market shares of many of the grocery giants today.
The company now aims to develop its operations on organic food as well. Currently, these natural and organic foods are priced at a premium when compared to other foods. Due to this, the lower middle class population has not been able to afford these healthy foods. Now, Kroger is doing all what it can to bridge the price difference between organic and other foods. Its brand, Simple Truth, which was kicked off couple of years ago, to manufacture only organic foods, has now close to 2700 brands under its belt. This brand has affordable organic products that cater to the needs of all kinds of customers. The best part about Kroger Foods is that its top management is very well focussed on making new developments in the sectors of grocery business and home delivery. With some timely acquisitions and astute management at the helm of affairs, Kroger Foods is all to excite its investors in the coming years as well.
Conclusion
With lots of names available in the grocery making and delivery segment, it requires a company with a difference to make a mark here. Kroger Foods is exactly that sort of a company – an unexpected performer in this category that has grown to the extent of taking away the market share from some of the biggies in this industry. Investors can trust this company and put their money in this as it is expected to grow at a more than reasonable rate in the coming years.
