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Mayank Marwah
Mayank Marwah
Articles (887) 

Kroger’s 1st-Quarter Earnings, Revenue Surpass Projections

Same-store sales grew 19%

June 18, 2020 | About:

Kroger Co. (NYSE:KR) released its first-quarter results before the opening bell on June 18.

The grocery store chain surpassed expectations for both earnings and revenue as customers bought large quantities of items in preparation for the coronavirus pandemic. In addition, strong digital sales aided the companys overall results for the quarter.

Snapshot of the quarter

The U.S. supermarket chain posted adjusted earnings of $1.22 per share, which was ahead of expectations of $1.12. Revenue of $41.55 billion was up from the $37.25 billion reported in the prior-year quarter. Analysts had projected revenue of $40.93 billion.

Comparable store sales, barring fuel, surged 19%, which surpassed expectations of 13.8% growth. Digital sales skyrocketed 92%.

The gross margin came in at 24.3% of sales in the reported quarter. The FIFO gross margin rate increased 44 basis points, adjusting for fuel sales. The company attributed the increase to sales leverage associated with shrink, transportation, warehousing and advertising expenses.

At quarter-end, the company had cash and cash equivalents of $425 million and total debt of $13.5 billion.

Key insights

Due to the Covid-19 pandemic, Kroger started providing no-contact delivery services, low-contact pickup services as well as ship-to-home orders. In addition, the company decided to forgo pickup fees. The company also waived the minimum purchase requirement and continued growing its contactless payment solutions like Kroger Pay.

In view of ensuring quick customer service, the company made investments to strengthen its omni-channel facility, which integrates the online and physical methods of shopping. In addition, the company made investments to improve the supply chain and grow its manpower. The company has also been hiring more employees in order to meet the rising customer demand amid the pandemic.

Krogers transformational plan, known as the Kroger Restock, which consists of investments in its omnichannel platform, recognizing different lucrative streams with high margins and reduction of expenses, gained traction during the quarter.

Guidance

The grocer did not provide fiscal 2020 guidance.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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